IMF sees India`s FY10 GDP growth at 5.3%

The Indian economy is slowing fast and the outlook for the next year remains uncertain, the International Monetary Fund (IMF) said. The IMF forecast that India's GDP growth would slow to 5.3% in the fiscal year 2009-10 after slipping to 6.3% in the current fiscal. Indian economy has grown by 9% in the past three years. "Policy measures to stimulate the economy and a good harvest should support domestic demand," the IMF said. "The uncertainty surrounding the forecast is unusually large, with significant downside risks. The main upside risk stems from a larger-than-anticipated impact of the stimulus measures that the authorities have already implemented." The IMF warned that India's debt as a percentage of GDP was already high, and the anticipated jump in the fiscal deficit could raise concerns about government finances. Any additional stimulus should be focused on high-quality infrastructure and poverty-related spending or to recapitalise banks if needed, the IMF said. The IMF said that given the budget constraints, the Government will have to fall back on monetary and structural policies to try and lift the economic gloom. But, the IMF is split on whether there is scope for more interest rate reductions in India.