The dispute between the International Monetary Fund (IMF) and former CEA Krishnamurthy Subramanian regarding India’s growth prospects has escalated. Subramanian asserted that the Indian economy could achieve an 8% growth rate until 2047, contrasting with the IMF’s stance, which distanced itself from his projections.
In response, Subramanian took a swipe at the IMF, alleging consistent inaccuracies in the organization’s growth estimates for India during his tenure. He expressed his discontent in a post on X (formerly Twitter), stating, “IMF staff’s estimate of India’s growth rate has been consistently INACCURATE.”
Highlighting the disparity between his forecasts and the IMF’s estimates, Subramanian emphasized the accuracy of his own predictions, noting, “While India’s growth has been >7%, IMF staff estimates have all been <7%.”
Also read: World Bank Predicts 7.5% Growth for Indian Economy in 2024
In September 2021, Subramanian forecasted India’s growth to exceed 7% for the decade. The actual growth rates stood at 9.7% in FY 2021-22, 7% in FY 2023-24, and an estimated 7.6% in FY 2024-25.
In contrast, IMF staff projected a growth rate of 6.1% for FY 2023-24 in November 2022, subsequently revising it down to 5.9% in April last year. Their latest estimate for India’s growth stood at 6.3% in November 2023.
Subramanian highlighted the “HUGE” error margins in IMF staff’s GDP estimates for India, citing discrepancies of 1.9% in November 2022 and January 2023, 2.1% in April 2023, and 1.7% in November 2023.
Subramanian’s assertion of an 8% growth rate:
During an event in New Delhi on March 28, Subramanian, the former CEA of the IMF, expressed optimism about India’s economic prospects. He suggested that if the nation continues to reinforce successful policies from the past decade and accelerates reforms, India could sustain an 8% growth rate until 2047.
IMF’s response:
Julie Kozack, spokesperson for the IMF, addressed Subramanian’s remarks during a media briefing, clarifying that his statements were made in his capacity as India’s representative at the IMF. Kozack emphasized the dual role of Executive Directors at the IMF, highlighting their responsibility to represent their home countries while also contributing to broader decision-making within the Fund.
IMF’s growth projections for India:
Contrary to Subramanian’s 8% claim, the IMF has projected a growth rate of 6.5% for India in both 2024 (FY25) and 2025 (FY26). This projection reflects an upgrade of 0.2 percentage points for both years since October, driven by resilient domestic demand, as stated in the IMF’s report.
Sources: livemint.com