The International Monetary Fund (IMF) on Monday lowered growth estimate for India to 4.8 per cent for financial year 2019-20, citing stress in the non-bank financial sector and weak rural income growth as the major factors for the downward revision.
While providing an update on the global economy ahead of the start of the World Economic Forum (WEF) annual summit, the IMF cut its India growth forecast to 4.8 per cent for 2019.
It expects growth to be 5.8 per cent in 2020 and rise to 6.5 per cent in 2021.
India-born IMF Chief Economist Gita Gopinath said growth in India slowed sharply owing to stress in the non-bank financial sector and weak rural income growth.
China's growth has been revised upward by 0.2 per cent to 6 per cent for 2020, reflecting the trade deal with the United States, she added.
In India, the IMF said domestic demand has slowed more sharply than expected amid stress in the non-bank financial sector and a decline in credit growth.
India's growth is estimated at 4.8 per cent in 2019, projected to improve to 5.8 per cent in 2020 and 6.5 per cent in 2021 (1.2 and 0.9 percentage point lower than in the October WEO), supported by monetary and fiscal stimulus as well as subdued oil prices, it added.
Ms Gopinath also said the pickup in global growth for 2020 remains highly uncertain as it relies on improved growth outcomes for stressed economies like Argentina, Iran, and Turkey and for underperforming emerging and developing economies such as Brazil, India, and Mexico.
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