Indian Economy Zoom

 India's economy is in a "fairly good shape" and it is likely to be less affected than other emerging economies if there is a further shock to the global economy, according to a senior official of the IMF.

"We've seen pretty tepid global growth rates in the recent past. If there's any adverse shock to the global growth and thereby global demand, we think India will not be unaffected but will be less affected than other countries which rely on exports and trade far more than India does," Paul A Cashin, assistant director in IMF's Asia & Pacific department, and mission chief of India, said.

"Until demonetisation there was very healthy consumption spending in India, which was basically propelling economic growth. India has an inward domestically demand-oriented economy, which is good when global growth factors are not exactly healthy," he said.

"That's why we think India will be, I'm not going to say immune, but less affected than other emerging economies if there's a further shock to the global economy, including a general global slowdown," Cashin said.

The International Monetary Fund, this week in its annual report on India, projected the growth to slow to 6.6 per cent in 2016-17 fiscal due to "temporary disruptions" caused by the demonetisation of high-value currency notes in November.



It, however, said demonetisation would have only short term impact on the economy and it would bounce back to its expected growth of more than 8 per cent in the next few years.

The near-term adverse economic impact of accompanying cash shortages remains difficult to gauge, while it may have a positive economic impact in the medium term, it added.



Cashin said the IMF is "fairly pleased" with what India has done, certainly over the last couple of years. "They're in a much better fiscal position than they were, much better in terms of their monetary framework and monetary policy."

"The external sector seems to be quite under control these days. Just on the inflation side, because of these eruptions in food prices which happen from time to time, now that they have formal inflation targeting, they need to properly implement a monetary stance to achieve their inflation targets," he said.


 


"Once the short-term dislocation to consumption from demonetisation passes, there'll be a little bit of a growth downturn this fiscal year, including the first quarter of the upcoming fiscal year. But after that, India should resume its previous above eight percent growth path in the medium term," Cashin said.

In its annual report, the IMF said in the absence of disruptive global financial volatility, slower growth in China, Europe and the United States would have only modest adverse spillovers to India, given weak trade linkages.

 

 

"On the external side, despite the reduced imbalances and strengthened reserve buffers, the impact from global financial market volatility could be disruptive, including from US monetary policy normalisation or weaker-than-expected global growth," it said.

Shoot

Trending News

Xiaomi pumps Rs 3,500 crore into India business

BlackBuck's out to raise $150M in new round, valuation likely to jump to $800 M

With $21 Billion, Azim Premji among world’s top philanthropists

Google agreed on a $45M exit package for India-origin exec accused of sex abuse

HSBC pegs Zomato's valuation at $3.6 billion ahead of Swiggy

PayU in talks to acquire online payments firm Wibmo for $60M

Quikr close to acquiring refurbished goods marketplace Zefo in all-stock deal

What life looks like after a layoff from an IT company

General Atlantic & Tencent pump in another Rs 80 Cr in ed-tech unicorn Byju's

US Senator Warren vows to break up Amazon, Facebook, Google

SoftBank extends tech reach with $5B Latin American fund

Coverfox hits the market to raise $50M in new financing round

Cognizant faces US lawsuit alleging discrimination

China's Huawei sues US over federal ban on using its products

Germany's Delivery Hero acquires Zomato's UAE biz, invests in India ops

Ahead of deadline, debate rages on e-commerce policy

Flipkart rejigs reporting of Myntra-Jabong head Amar Nagaram

Grofers raises fresh funds from existing investors, valuation hits $425M

Sachin Bansal invests Rs 250 Cr each in NBFCs Altico & IndoStar: Report

I-bank Wolet files $800k suit over Flipkart’s Upstream buy

Flipkart FY18 revenue up 50%, but losses grow 5x

Pine Labs in talks to acquire Amazon-backed Qwikcilver for $100M

India can become 2nd largest 5G market in 10 years: Huawei

Alibaba rival Pinduoduo seeks to raise $1.5B

Twitter Q4 revenue grows to $909M as video ad sales surge

Mukesh Ambani to invest $1.4B in West Bengal, will help e-commerce expansion

Etail may lose Rs 40,000 crore, retail to get a 3rd of it

Steadview Capital invests $74M in Ola valuing it at around $6B

Byju’s ups revenue to Rs 490 cr in FY 18, losses drop by half

Agritech startups Sabziwala and LivLush merge their business under new entity Kamatan

Avail Finance lands $17.2M from Matrix Partners & Ola, Freecharge and Flipkart founders

RBI suggests tax sops, self-regulation to build fintech space

Swiggy hires new CEO for its Access Service, gets new CFO

Logistics company Delhivery registers 44% increase in FY17 revenues

WeWork to acquire one of the oldest social networks, Meetup

Qualcomm rejects Broadcom's $103 billion offer

EasyRewardz gets $2 million Series-A funding

'Anemic' iPhone 8 demand drags Apple shares lower

Lending platform Lenden Club gets Rs 3.5cr in Equity Investment

On festive sales, Flipkart says 65% clients from Tier-II cities