Washington: The IMF on Tuesday trimmed India's annual growth forecast by 0.4 percentage points to 7.2 percent for 2017, citing the impact of demonetization.
"In India, the growth forecast for 2017 has been trimmed by 0.4 percentage point to 7.2 percent, primarily because of the temporary negative consumption shock induced by cash shortages and payment disruptions from the recent currency exchange initiative,
The International Monetary Fund (IMF) said in its latest annual World Economic Outlook (WEO).
The World Economic Outlook was released here before the start of the annual Spring Meeting of the International Monetary Fund and World Bank.
"Medium-term growth prospects are favourable, with growth forecast to rise to about eight per cent over the medium term due to the implementation of key reforms, loosening of supply-side bottlenecks, and appropriate fiscal and monetary policies," the IMF report said.
The Indian government in February had pegged GDP boom at a higher-than-predicted 7.1 in step with the cent for the current fiscal despite the note ban.
But, analysts had raised worries over the determine, pronouncing it had now not taken into account the entire impact of demonetisation.
According to the IMF report, India's economic system has grown at a robust tempo in latest years attributable to the implementation of critical structural reforms, beneficial terms of alternate, and lower outside vulnerabilities.
"beyond the on the spot project of changing foreign money in circulating following the November 2016 forex initiative, coverage movements need to awareness on lowering labour and product marketplace rigidities to ease firm entry and go out, enlarge the producing base, and gainfully hire the plentiful pool
of labour," it stated.
Policy actions should also consolidate the disinflation underway since the collapse in commodity prices through agricultural sector reforms and infrastructure enhancements to ease supply bottlenecks, the report said.
Policy actions should also boost monetary stability via full popularity of non-performing loans and elevating public zone banks' capital buffers and cozy the public finances thru endured discount of poorly targeted subsidies and structural tax reforms, consisting of implementation of the lately approved national goods and services tax, it said.