The International Monetary Fund has pegged contraction in India’s economy at eight percent in the current financial year. However, it is expected to rise to 11.5 percent and regain its tag of the fastest growing economy in the world.
The growth numbers for the next financial year have their importance for the Budget, which will be tabled in Parliament in less than a week. The Budget assumes economic growth at current prices, which has an inflation component in it. It also projects the economy to grow by the same rate and assumes an inflation rate of 3.5 percent.
The 2021 forecast is revised up 0.3 percentage point as compared to the previous forecast. It surely reflects expectations of a vaccine strengthening activity later in the year and additional policy support in a few large economies.