IMF pegs growth at 6.4%

The economy is poised to grow by 6.4 per cent during the current year and 6.7 per cent in 2005, but a poor monsoon is raising concerns over agricultural growth, the International Monetary Fund (IMF) said here today.

"India's Gross Domestic Product (GDP) is projected to grow at 6.4 per cent in 2004 underpinned by global expansion and supportive monetary conditions, although unfavourable patterns in this year's monsoon are raising concerns about agriculture growth", the report said.

The IMF, in its annual World Economic Outlook released here said current projections for 2005 stood at 6.7 per cent.

The funding body, however, cautioned India against run-away expenditure without adequate revenue and called for pushing up farm and trade reforms.

The newly-elected United Progressive Alliance (UPA) coalition, it noted, "intends to effect ambitious fiscal adjustment to balance the current budget by 2009 (targeting annual adjustment of at least 1/3 per cent of GDP in the overall central government balance)".

"The government also proposed increased expenditure in priority areas including health, education and infrastructure investment," the IMF said, adding "while this target path appears broadly appropriate, the supporting measures that were recently proposed will take time to be implemented and yield results".

"In view of this uncertainty, expenditure increase should be contingent on progress on the revenue front", it said adding, accelerating structural reforms, including agricultural and trade liberalisation remains the key to step up potential growth and reduce poverty.