IMF lowers India's growth forecast to 6.9 pc on investment slowdown

New Delhi, Apr 27 (PTI) Cautioning that governance concerns have weakened business sentiment in the country, the IMF today lowered India's growth projection to 6.9 per cent for 2012. The International Monetary Fund (IMF) in January pegged Indian economic growth to expand 7 per cent for this year. "In India, the lowered growth outlook in 2012 owes much to a slowdown of investment which partly reflects structural factors," the multilateral agency said. IMF called for renewed efforts to revive the "flagging" structural reform agenda. Apart from some financial reforms and measures to broaden the use of public-private partnerships announced in the 2012-13 budget, the implementation of reforms related to infrastructure is likely to proceed slowly, it noted. IMF's Asia-Pacific Regional Economic Outlook released today also pointed out that domestic factors too have played a role in India's growth slowdown over the second half of 2011. "Concerns about governance and slow project approvals by the government have weakened business sentiment, which in turn has adversely affected investment, along with cyclical factors such as global uncertainty and policy tightening ...," IMF said. However, the multilateral agency has retained India's growth estimate at 7.3 per cent for 2013. As per the IMF, the Indian economy grew by 7.1 per cent last year. The report said that Asian economies, led by China and India, are expected to see better growth this year but any escalation of European debt turmoil will impact them. The multilateral agency noted that though Asia's growth is expected to "pick up this year after slowing in the last quarter of 2011", Asian policymakers face the challenging task of adjusting policies to support stable, non-inflationary growth. "An escalation of the crisis with a disorderly, large scale, and aggressive trimming of balance sheets could have a serious impact on Asia," the report added. Asia is projected to see an economic growth of six per cent this year, almost the same level as in 2011. IMF said emerging Asia would remain the fastest growing region in the world, led by China and India, expanding about 8.25 per cent and close to 7 per cent, respectively, this year. Emphasising that economic rebalancing remains a policy priority for much of Asia, the IMF said the best way for the region to protect itself against external shocks is by strengthening domestic sources of growth. On the impact of European crisis on Asia, the report noted that a sharp fall in exports to advanced economies and a reversal of foreign capital flows would severely hit the region. PTI