India is set to become the world’s fastest growing economy: IMF forecast

This is an Economic Times article published on 21 Jan 2015.

International Monetary Fund in World Economic Outlook said India’s gross domestic product is likely to grow at 6.3 per cent in the next fiscal year.India is set to become the world’s fastest-growing major economy in about two years from now, as China slows after tearing along at speeds in excess of 10 per cent at times over the past three decades or so, according to latest projections by the International Monetary Fund in the World Economic Outlook.

The IMF’s flagship publication said India’s gross domestic product is likely to grow at 6.3 per cent, marginally down from 6.4 per cent projected in October, in the next fiscal year and 6.5 per cent in year to March 2017, which will be the third year of the Narendra Modi government. The World Bank had said last week that it sees China being dislodged by its neighbour to the south in calendar 2017.

Stocks ended at record levels following the IMF data release with the BSE Sensex closing at 28,784.67 points, up 1.85 per cent, and the NSE Nifty rising 1.7 per cent to 8,695.6.

The likely role switch comes amid the Chinese economy stumbling on bad loans from excessive spending and investment drying up. While India’s growth forecast is broadly unchanged, that of China has been slashed by half a percentage point from October projections. Official Chinese government data released on Tuesday showed it posted growth of 7.4 per cent last year, missing the official target and slumping to a 24-year low, although this was better than the 7.2 per cent expectation. In India, weaker external demand has been offset by the boost to the terms of trade from lower oil prices and a pickup in industrial and investment activity after policy reforms, the IMF said.

In its global outlook released on January 13, the World Bank projected India to edge past China in 2017, clocking 7 percent growth.