8% GDP growth for India will take tough decision, time: IMF

Indian economy

It will take India some tough decisions and several years before it can think of going back to a growth era of 8 per cent and more, which was an easy walk through till a few years ago, IMF has said.

"To go back to eight per cent (annual growth rate) you (India) need to see move on a lot of fronts and investment picking up very robustly.

"It will depend very much on whether the government can deliver on all the reforms that they've committed to and sustain this economic reform momentum," Laura Papi, IMF Assistant Director, formerly with its Asia and Pacific Department, said.

"We think that an important array of reforms are needed to get back to 8 per cent growth including legislative moves. The land acquisition bill requires, of course, parliamentary approval, the GST requires even a constitutional amendment,

etc. Labor laws are even further out and less likely," she said in response to a question.

The IMF had yesterday said India's growth rate is expected to drop to 5.4 per cent in 2012-13 from 6.5 per cent the previous year.

This is a substantial drop from the impressive growth rate of an average of 8.3 per cent India registered between 2004 and 2011.

"Outlook is for subdued growth and a fairly modest recovery for this year still accompanied by quite high inflation and elevated current deficit.

The reason for this outlook is that investment has slowed significantly and we see some supply-side issues such as supply bottlenecks as having played an important part in lower investment growth and because of this we have also revised down our medium-term growth projection," she said.

Appreciative of the recent steps taken by the Union Government, she said the key would be on their sustained implementation.

Responding to a question, Papi said there is no silver bullet or one reform that would boost India's economic growth.

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