IMF Slashes India's Growth Projection to 7.3%, Cites Rising Oil Prices
Apart from the rising crude prices, the escalation in tariffs would also hurt the world economy in the long-run, the IMF report said | File Image | (Photo Credits: PTI)

New Delhi, July 17: The International Monetary Fund (IMF) has marginally slashed the growth projection for India, citing the spiralling fuel prices and anticipating a tightening of the monetary policy by the Modi government to keep inflation in check.

The World Economic Outlook (WEO) report released by the IMF on Monday said India is poised to grow at 7.3 per cent in the current fiscal, followed by 7.5 per cent in the succeeding year. This is lower than the projections of 7.4 and 7.8 per cents for FY18-19 and FY19-20 made in the previous IMF report.

Meanwhile, the growth projection of China is left unchanged at 6.4 per cent and 6.6 per cent for the current and next fiscal, respectively.

IMF Research Director Maury Obstfeld said the world economy is expected to accelerate at 3.9 per cent, despite the political crisis in parts of Middle East, Africa and Latin America, along with the threat of "trade wars" between major economies in the world.

On India, Obstfeld said the growth project is being marginally cut due to the potential dip in demand owing to the spiralling fuel prices. The rate of petrol and diesel has witnessed an upswing due to the rise in brent crude oil prices, which crossed the $80 benchmark last month.

Apart from the rising fuel prices, the escalation in tariffs would also hurt the world economy in the long-run, the top IMF official said.

“We continue to project global growth rates of just about 3.9 per cent for both this year and next, but judge that the risk of worse outcomes has increased, even for the near term," he said.

The United States of America is poised to grow at 2.9 per cent, the report said. This is an upswing from the Obama-era GDP growth. Obstfeld said the primary reason for the positive projection is the strengthening of the US dollar. The currency has appreciated by 5 per cent since February.