IMF sees 5.4% growth for India in 2014-15; inflation a worry

The International Monetary Fund on Thursday projected a higher 5.4 per cent economic growth for India in 2014-15, while suggesting strengthening of inflation-management policies and doing away with supply bottlenecks for better GDP growth.

The IMF sees inflation, driven by food prices, remaining near double digits in 2014-15, though it said the resultant tight monetary policy is likely to slow recovery in growth.

"Growth is projected at 4.6 per cent for fiscal year 2013-14, and should pick up to 5.4 per cent in 2014-15 (at factor cost)," the multilateral lending agency said in its report after concluding annual discussions with India.

According to India's official estimates, the economy is likely to expand at 4.9 per cent in 2013-14 as against 4.5 per cent in the previous fiscal. The government expects to growth to pick up in the 2014-15 fiscal.

Meanwhile, in a note prepared for the G20 leaders' meet that will start on 22 February in Sydney, the IMF asked high inflation countries like India to strengthen their fiscal and monetary policy frame work to tackle price rise.

"On the monetary front, economies where inflation is still relatively high, or where policy credibility has come into question, need to continue tightening monetary policy in the context of strengthened policy frameworks (India and Turkey)," IMF said in a note prepared for the G20 leaders' meet starting on February 22 in Sydney.

Inflation has been a major concern for India for the past few years. However, in the past few months, it has starting showing signs of moderation, with the Reserve Bank of India keeping money tight to tame inflation.

The Washington-headquartered agency also stressed that countries like India need to improve its supply infrastructure by doing away bottlenecks to achieve faster growth, job creation and poverty reduction.