If lucky,India may grow 10 pc in 2010

The International Monetary Fund (IMF) today revised the growth forecast for India made in April 2010 by about 75 basis points to 9.5 per cent for calendar year 2010....

The International Monetary Fund (IMF) today revised the growth forecast for India made in April 2010 by about 75 basis points to 9.5 per cent for calendar year 2010. The Fund,however,retained its forecast for 2011 at 8.5 per cent.

Robust corporate profits and favourable financing conditions would fuel investment,the IMF said,updating the World Economic Outlook. This is one of the rare instances when the IMF’s projections are higher than the growth estimates by the government. Prime Minister Manmohan Singh has often said India would grow 8.5 per cent in the current fiscal. According to the report,world growth is projected at 4.5 per cent in 2010 and 4.25 per cent in 2011.

The update released today said that economic activity in the region has been sustained by continued buoyancy in exports and strong private domestic demand. In line with this,GDP growth forecast for Asia has been revised upward for 2010,from about 7 percent in the April WEO to about 7.5 percent. For 2011,when the inventory cycle will have run its full course and the stimulus is withdrawn in several countries,Asias GDP growth is expected to settle to a more moderate but also more sustainable rate (about 6.75 per cent), the report states.

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Even though the report states that turbulence in the Euro and a stall in the European recovery may spill over to Asia through both trade and financial channels especially in export dependent nations,the large domestic demand bases in some of the Asian economies such as China,India and Indonesia could provide a cushion to growth.

The report further states that in the event of such a contagion,Asian central banks could swiftly redeploy tested instruments to overcome market seizures. Many regional economies also have room for further policy maneuver and could delay the planned withdrawal of monetary and fiscal stimulus to mitigate adverse spillovers to the real economy.

The report also revised the growth prospects for China from 10 per cent in 2010 to 10.5 per cent. It forecasts Chinese growth to hover around 9.5 per cent in 2011.

What has been so far mainly a publicly driven growth path,built on infrastructure investment,is expected to turn toward stronger private consumption and investment,WEO had said with respect to India and China in April this year.