The International Monetary Fund on Tuesday slashed Indiaâ€™s Gross Domestic Product growth forecast for the 2017-â€™18 financial year to 6.7% in itsÂ World Economic OutlookÂ report for October. In its April and July reports, the IMF had predicted that India would grow at 7.2% in 2017-â€™18.
The international organisation said demonetisation and the uncertainty around GST have slowed down the pace.
Â The international organisation also reduced Indiaâ€™s projected GDP growth rate for 2018-â€™19 from 7.7% to 7.4%. â€œIn India, growth momentum slowed, reflecting the lingering impact of the authoritiesâ€™ currency exchange initiative [demonetisation] as well as uncertainty related to the midyear introduction of the country-wide Goods and Service Tax,â€ the IMF said in its October report. Indiaâ€™s GDP growth rateÂ fellÂ to 5.7% for the first quarter of 2017-â€™18.
However, the report added that the GST, â€œwhich promises the unification of Indiaâ€™s vast domestic market, is among several key structural reforms under implementation that are expected to help push growth above 8% in the medium termâ€.
In comparison, China will grow at 6.8% in 2017-â€™18, the IMF report said. However, its projected growth rate for 2018-â€™19 is below that of India 6.5%.
The IMFâ€™s growth forecast of 6.7% for India in 2017-â€™18 matches thatÂ ofÂ by credit rating agency India Ratings on September 27. India Ratings had said that the â€œmore disruptive than expectedâ€ impact of demonetisation and the Goods and Services Tax were factors responsible for the projected decline in Indiaâ€™s economic growth.
On October 2, Fitch Ratings hadÂ reducedÂ Indiaâ€™s projected growth for the 2017-â€™18 financial year to 6.9% from its earlier forecast of 7.4%.