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Affected By Demonetisation And GST, India Falls Behind China In IMF Growth Forecast

News World India | 1
978
| } October 11 , 2017 , 08:31 IST

The goal of India to become a superpower and its status as one of the fastest growing economies in the world took a hit by demonetisation and implementation of the Goods and Services Tax (GST), which resulted in a slowdown of the economy.

The International Monetary Fund (IMF) on Tuesday lowered  India's growth forecast for 2017 to 6.7 percent, a decrease of 0.5 percentage points from the previous two growth projections in April and July, citing demonetisation and GST as the reasons for the decrease.

According to the latest IMF report which was released ahead of the IMF and World Bank annual meeting in Washington, China has moved slightly past India in terms of projected growth rate for 2017.

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India has been projected for a growth of 6.7 percent, while China has been projected for a growth of 6.8 percent, an increase of 0.1 percent from its previous projections in April and July.

Apart from this year's projections, the IMF has also lowered the growth forecast for the nation in 2018, reducing it to 7.4 percent, a decrease of 0.3 percentage points from the April/July projections.

"In India, growth momentum slowed, reflecting the lingering impact of the authorities, currency exchange initiative as well as uncertainty related to the midyear introduction of the country-wide Goods and Services Tax," the IMF said in its latest World Economic Outlook report.

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"Strong government spending and data revisions in India led to an upward revision of 2016 growth to 7.1 percent (6.8per cent in April), with upward revisions of about 0.2 percentage point, on average, for 2014 and 2015," the report said.

However, India would likely bypass China once again in 2018 to regain the tag of the fastest-growing emerging economy of the world as India has a growth forecast of 7.4 percent for the year 2018, as compared to China which has a projected growth of 6.5 percent in 2018.