IMF supports India's tightening of monetary policy

Lalit K Jha
Washington, Apr 22 (PTI) The International Monetary Fund
(IMF) has said the tightening of monetary policy by India is
an 'appropriate' step, as the country is faced with high
inflation and needs to consolidate the fiscal measures
initiated during the slowdown.
"India is relatively more closed, and has relied on
stimulus to support growth. The main challenge will be to
ensure durable fiscal consolidation, including by implementing
fiscal and other structural reforms," Abdul Abaid, senior
economist in the World Economic Studies Division of the IMF,
said at a news conference held at its headquarters here
on Wednesday.
He said in relation to other countries in the Asian
region, India has high inflation, and the tightening of
monetary policy currently under way is appropriate.
Referring to the latest World Economic Outlook, he said
in India, growth is projected to be 8.8 per cent in 2010, and
8.4 per cent in 2011, which is supported by rising private
domestic demand.
"Consumption will strengthen as the labour market
improves, and investment is expected to be boosted by strong
profitability, rising business confidence, and favourable
financing conditions," he said.
In India's neighbourhood, Nepal's real GDP growth is
expected to slow to three per cent in 2009-10 from 4.7 per
cent in 2008-09 due to poor monsoon and softer remittances,
but growth is anticipated to strengthen again in 2010-11, said
the IMF official.
For Sri Lanka the IMF projects an acceleration in growth
from 3.5 per cent last year to 5.5 per cent this year.
"There is currently an IMF programme, which we can't
comment on, the key priority in Sri Lanka is basically to
obtain a credible and sustainable reduction in the fiscal
deficit going forward. That is the main vulnerability there
right now," he said. PTI LKJ
MYR