The International Monetary Fund on Tuesday cut India’s economic growth forecast for 2019-20 by 30 basis points to 7% on the back of weaker than expected domestic demand and investment.
“In India, there was weaker than expected domestic demand and there was a weakness that was fairly broad-based in investment and consumption in the first quarter of this year and that has led to the downward revision both in 2019 and 2020."
“While some of this was the reflection of the run-up to the elections and the uncertainties associated with that, there were also some tightening of financial conditions especially the borrowing by small and medium enterprises but we expect some of that to improve in the near term and that along with a more accommodative monetary policy and fiscal policy of the Indian government should remove the downside risks,” IMF chief economist Gita Gopinath told the press in Washington while giving the latest update to the World Economic Outlook.
India’s economy is expected to grow at 7% in 2019, picking up to 7.2% in 2020, according to the IMF.
IMF's growth revision is in line with the World Bank and RBI, which have also cut India's GDP forecast in the past few weeks.