Growth May Fall Short of PM Modi's 8.5% Target, Reforms Key: IMF

Prime Minister Narendra Modi's target of achieving 8.5 per cent GDP growth in the 2015-16 fiscal year starting April 1 may not be feasible, the International Monetary Fund said on Wednesday. Asia's third-largest economy is likely to grow at a slower pace of 7.5 per cent in the next fiscal as compared to 7.2 per cent rate in the current fiscal, the IMF said in its annual report.. Both the IMF and the government forecasts are based on new methods for calculating gross domestic product.. However, the IMF praised PM Modi's government saying India's economy is recovering and its ability to withstand external shocks has improved.. "The Indian economy is reviving, helped by positive policy actions that have improved confidence and lower global oil prices," the Washington-based lender said, adding: "To continue on this trend, India needs to revitalize the investment cycle and accelerate structural reforms.". With 100 million people joining India's workforce in the next decade, India needs to do more to address bottlenecks in energy, power and mining, and to fix gaps in infrastructure, the IMF report said.. The Fund also urged the passage of reforms to land acquisition laws now before Parliament; improvements in the efficiency of a state food aid scheme; greater flexibility in labour markets and improvements in education.. The IMF's mission chief for India, Paul Cashin, said India's balance of payments position was comfortable thanks to a fall in gold imports and the price of oil. Investments in power and transport projects were starting to pick up.. Mr Cashin said there would be room for the RBI, which has cut interest rates twice already this year, to ease policy further and still achieve its goal of bringing down consumer inflation to 6 per cent in early 2016.. Hitting the RBI's medium-term inflation target of 4 per cent, within a band from 2-6 per cent, would be "quite a challenging target to achieve", he told a conference call with reporters, given the supply bottlenecks that constrain businesses in India.

Growth May Fall Short of PM Modi's 8.5% Target, Reforms Key: IMF

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