Lauding the RBI's hawkish monetary policy announced last week, IMF director, Asia Pacific department, Anoop Singh said, "We strongly welcome the steps that RBI has taken and remain confident about its stated policy stance to maintain an interest rate environment that moderates inflation and anchors inflationary expectations"
Mumbai: The International Monetary Fund (IMF) on Monday again revised downwards the country's growth outlook for 2011 to around 8% on the back of high inflation and overall global economic outlook, clouded by rising commodity prices led by oil, reports PTI.
"As new downside risks have emerged across the globe, and particularly in Asia Pacific economies with many of them overheating, we revise downwards our growth for the region and also for India, where we see the growth momentum decelerating this fiscal to around 8%," said IMF director, Asia Pacific department, Anoop Singh.
The multilateral agency had earlier also moderated the country growth projection to 8.2% from the 8.4%.
"In 2011, the pace and composition of growth will continue to show notable differences across Asia. China and India are expected to lead the rest of the region with China growing by 9.5% and India by around 8%," Mr Singh said.
He was talking to the media after presenting its latest report on the Regional Economic Outlook for Asia and Pacific: Managing the Next Phase of Growth to the Reserve Bank officials here.
Earlier, international financial lender Asian Development Bank (ADB) had also revised its growth projection for India to 8.2% for this calendar year from earlier estimate of 8.7%, on account of high prices.
In the annual monetary policy announced on 3rd May, the Reserve Bank of India (RBI) had said the country's economy would grow to around 8% while the Budget pegged growth at 9% over even more.
Chief economic adviser Kaushik Basu had on Friday indicated that the government would revise downward the growth forecast for the year. Last fiscal, the economy is believed to have grown by 8.6%.
"All over the world there has been revision of growth prospects. So we might go in for a revision. Obviously, it is not going to be upwards," Mr Basu had said in Delhi.
Meanwhile, the IMF report said that for the whole of Asia, it expects growth to remain robust at a sustainable pace of nearly 7% for this year as well as the next.
Underlining the need for controlling inflation and rising pressures of overheating of many Asian economies, the report says, "... Asia's rapid growth has been accompanied by the emergence of overheating pressures, in both goods and asset prices, as output gaps have generally closed."
It notes that headline inflation has now spilled over into core inflation, raising inflation expectation in many countries, including India.
On the newly emerged risks to growth, the report says, fiscal and financial vulnerabilities continue to cloud the outlook for advance economies and new downside risks in emerging markets wherein the Japanese disaster, rising oil and food prices could affect Asia's growth and inflation outlook.
"The terrible losses suffered from the earthquake and tsunami in Japan followed by a prolonged disruption of industrial production, could affect other economies in Asia and elsewhere which are linked to Japan through supply chain," says the report.
The report says, "Renewed spikes in energy and food prices could affect Asia's growth and inflation outlook.
India, among other countries, is particularly vulnerable to food and energy price disruptions because of its relatively higher share in the expenditure basket.
It adds, "We expect inflation in many Asian economies to peak in mid-2011 before decelerating in 2012, but risks are titled to the upside," the report notes.
To a question on whether India will be able to achieve its ambitious fiscal deficit target in the wake of likely deceleration in growth, IMF director Anoop Singh said, "The government is very much resolved to doing so. After all we are only in the beginning of the year."
The Budget 2012 has pegged the fiscal deficit at 4.6% of the gross domestic product (GDP) or Rs4.13 lakh crore, while the same is believed to have closed at 5.1% in the last fiscal on the back of the spectrum haul and reduced public spending by the Centre.
The government collected Rs1.08 lakh crore from third generation (3G) and broadband wireless access spectrum auctions last fiscal, which helped it reduce the fiscal deficit from 5.5% estimated earlier to 5.1%.
Following the global economic crisis and the resultant stimulus measures, the fiscal deficit had ballooned to 6.3% of the GDP in the fiscal year 2010-11. In the medium-term fiscal policy, the budget pegs the rolling target of fiscal deficit at 4.1% for the fiscal year 2012-13, and 3.5% for the fiscal year 2013-14.
Lauding the hawkish monetary policy stance taken by RBI last week, Mr Singh said, "We strongly welcome the steps that RBI has taken and remain confident about its stated policy stance to maintain an interest rate environment that moderates inflation and anchors inflationary expectations."