The Hindu Business Line : IMF pegs GDP growth this year at 5.6 pc

THE International Monetary Fund (IMF) has said India's growth rate in the current year will remain well below the targeted 8 per cent, undermining the official goals for reducing poverty and regional disparities.

In its World Economic Outlook 2003 released on Thursday, IMF has also projected a 5.6 per cent economic growth for India in 2003 and 5.9 per cent in 2004.

The report highlighted that growth in the country is expected to pick up later this year on the back of a recovery in the agricultural sector following last year's drought.

A key issue that remained for India was the slow pace of fiscal and structural reforms, it said. With the general Government deficit set to reach about 10 per cent of the GDP for a fifth year, and debt plus recorded contingent liabilities nearing 100 per cent of GDP, fiscal policy is clearly on an unsustainable path, IMF noted.

It also regretted the absence of consolidation efforts in this year's budget and delay in introduction of value-added tax. IMF report also highlighted that the limited degree of exchange rate flexibility, in the face of continued strong foreign exchange inflows, has contributed to a record building of foreign exchange reserves, complicating the implementation of monetary policy.

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