IMF projection 2022-23: What worked in India's favour

By Anish Kumar | First Published Apr 20, 2022, 5:34 PM IST

Experts say that even though the IMF projections do sound flattering but India needs to be extra careful about the Covid 19 threat.

Despite global setbacks from looming war fears between Russia and Ukraine, India will still be the fastest-growing economy in the world, leaving behind major advanced as well emerging economies.

Washington-headquartered International Monetary Fund has projected India to grow at 8.2 per cent in 2022-23 and 6.9 per cent in the next financial year.

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Also Read: Ukraine war: Russian economy to contract by 8.5% for 2022: IMF

According to experts, a few things worked in India's favour despite a heavy cost.

Economic Expert Prakash Chawla said, "In a scenario where the IMF has projected global economic growth of 3.6 per cent, India's position as the fastest-growing economy of the world with 8.2 per cent likely expansion in 2022 should please us. A few things are working, at the moment, in favour of India despite the heavy cost of the Ukraine-Russia war being inflicted on the energy import-dependent countries.

India has achieved quite a success with its vaccination programme with a cumulative coverage of 187 crore doses, providing immunity to an overwhelming majority of our population. Along with the natural immunity, our economic activities -- led by a predominant services sector -- have returned to normalcy.

The contact services like hotels, road, rail and air travel have bounced back with popular hill stations reporting full bookings in the summer season.

Agriculture, though impacted by an increase in input costs, is harvesting a bumper Rabi crop and is projected to be receiving a normal Monsoon. Agri exports, led by wheat and sugar have been helped by the global foodgrain shortages caused by the Ukraine-Russia war.

According to Chawla, manufacturing is still grappling with several challenges, including rising raw material costs, supply chain disruptions and the interest rates reverting to the normal trajectory after a long soft spell.

Chinese economy which used to grow at almost the same rate as that of India has this time lagged far behind. The international financial institution has forecasted the Chinese to grow at 4.4 per cent in 2022-23 and 5.1 per cent in 2023-24.

Prior to Russia's invasion of Ukraine in January, the IMF had stated that India would grow at a pace of 7.1 per cent in 2023-24 but this time it has cut its growth to 6.9 per cent for the same period while the Reserve Bank of India has estimated an expansion of 6.3 per cent.

In its latest World Economic Outlook Growth Projections report, the IMF has predicted that the global economy would grow at 3.6 per cent in 2022-23 and 2023-24 too.

As per the IMF estimation, the advanced economies that include the United States, European Nations, the United Kingdom, Japan and Canada, would be growing at 3.3 per cent, which is 30 basis points less than the growth of global economies.

The economies of the US, France, Germany, the UK, Japan and Canada would be growing at 3.7, 2.9, 2.1, 3.7, 2.4 and 3.9 per cent, respectively. Among the economies, the IMF found Russia to be the biggest growth estimate cut, contracting at 8.5 per cent in 2022 as against a growth of 2.8 per cent forecast in January.

The Russian economy is expected to shrink again in 2023, by 2.3 per cent.

However, the economic expert also added a sound of caution. He said that even though the IMF projections do sound flattering but India needs to be extra careful about the Covid 19 threat.

"We cannot afford and allow another wave of the pandemic. That is possible only if we keep accelerating vaccination speed and coverage and revert to Covid protocols, at least wearing masks. At stake is our highly employment-oriented services sector which seems to be leading the growth engines, also being pulled along by agriculture and public spending," he said.

As far as lowering the IMF estimates by 0.8 percentage points is concerned, that is understandable in the backdrop of global headwinds of war and inflation, he added.

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