IMF Cuts India’s Growth To 9% World Economic Outlook

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What has happened?

Global economic growth will dip from 5.9% in 2021 to 4.4% in 2022, half a percentage point less than it estimated just three months ago, and 3.8% in 2023,
The International Monetary Fund (IMF) noted in its World Economic Outlook released on Tuesday.

India’s growth forecast

The International Monetary Fund (IMF) has cut India’s economic growth forecast to 9% for the current fiscal year ending March 31,
Joining a host of agencies which have downgraded their projections on concerns over the impact of a spread of new variant of coronavirus on business activity and mobility.
In its latest update of World Economic Outlook on Tuesday, the Washington-based international financial institution, which had in October last year projected a 9.5% GDP growth for India, Put the forecast for the next fiscal FY23 (April 2022 to March 2023) at 7.1%.

The IMF’s forecast for the current financial year is less than 9.2% that the government’s Central Statistics Office has predicted and 5% that the Reserve Bank of India has estimated.
Its forecast is lower than the 9.5% projection by S&P and 9.3% by Moody’s but more than the 8.3% projection by the World Bank and 8.4% by Fitch.

The problem

“As the new Omicron Covid-19 variant spreads, countries have reimposed mobility restrictions.
Rising energy prices and supply disruptions have resulted in a higher and more broad-based inflation than anticipated, notably in the United States and many emerging market and developing economies.
The ongoing retrenchment of China’s real estate sector and slower-than-expected recovery of private consumption have also have limited growth prospects,” the report notes.
The dip in its projections for global growth are largely driven by the Fund’s assessment of economic prospects in the US and China.
The report noted that removing the Build Back Better policy (a Joe Biden initiative that is stuck in Congress) from the baseline, earlier withdrawal of monetary accommodation, and continued supply shortages produced a downward revision of 1.2% points for growth in US in 2022 – now pegged at 4%.
“In China, pandemic-induced disruptions related to zero-tolerance Covid policy and protracted financial stress among property developers have induced a 0.8 percentage point downgrade.”
IMF believes that elevated inflation will stay longer than assumed, and will wane off only in 2022 as “supply side imbalances wane and monetary policy in major economies responds”.
The outlook, however, is clear on the risks to the global economy – pointing to the possibility of the emergence of new Covid-19 variants, renewed economic disruptions, supply chain disruptions, energy price volatility, and localised wage pressures.

For India?

According to the IMF, India’s prospects for 2023 are marked up on expected improvements to credit growth and,
Subsequently, investment and consumption, building on better-than-anticipated performance of the financial sector.

Q) Income tax in India was first introduced in 1960 by?