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Significantly off the mark, says India’s chief economic adviser on IMF downgrade

Krishnamurthy Subramanian's projections are more in line with the Reserve Bank of India, which pegged GDP growth at 10.5 percent for FY2022

August 03, 2021 / 11:36 AM IST
CEA Krishnamurthy Subramanian

CEA Krishnamurthy Subramanian


India’s chief economic adviser Krishnamurthy Subramanian has said the International Monetary Fund's (IMF) recent downgrade of the country’s growth projection is "significantly off the mark."

Last week, the IMF cut India's gross domestic product (GDP) growth forecast to 9.5 percent for the fiscal year 2021-22 from 12.5 percent, citing the hit on economic activity and demand due to the deadly second wave of the COVID-19.

"Growth prospects in India have been downgraded following the severe second COVID wave during March-May and expected slow recovery in confidence from that setback," the multilateral institution said in its latest World Economic Outlook report.

In an interview to CNBC on August 2, Subramanian said the 3 percent downgrade by the IMF was driven by saliency bias where the focus was more on striking information while data that was comparatively less remarkable was ignored.

"Our projections were not as high as theirs, nor do we think that the revision is warranted," said Subramanian who disagreed with IMF's projections. "I would say IMF is significantly off the mark."

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Subramanian's projections are more in line with the Reserve Bank of India (RBI) that pegged GDP growth at 10.5 percent for FY2022.

Care Ratings said it expects India's GDP to grow between 8.8 and 9 percent in the current financial year, driven by agriculture and industry sectors.

Fitch Ratings, on the other hand, cut its growth forecast for the country to 10 percent for FY22 from 12.8 percent estimated earlier, due to slowing recovery post the second wave of COVID-19. The global rating agency said rapid vaccination could support a sustainable revival in business and consumer confidence.

Moneycontrol News
first published: Aug 3, 2021 11:36 am

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