March 8, 2021

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Indian economy is on a decline. So why are IMF and World Bank’s growth forecasts so high

As of late 2018, India was the fastest growing economy in the world. But lately, India has been facing a liquidity crisis and serious doubts have started to emerge about its true state. Analysts have been trying to figure out the cause of this Indian economy slowdown. So, nobody was surprised to see that IMF and World Bank’s growth projections for India were reduced  but the main question that had risen from the projections was that why were the projections still comparatively high.An employee fits a wheel in a car factory | Representational image | Photo: Udit Kulshrestha/Bloomberg

Many analysts from around the world including the former Chief Economic Adviser of India, Arvind Subramanian, studied the economic data provided by the Indian Government. When 20 of the most important economic indicators were taken into account, it was found that they were not showing signs of slowdown but a negative trend. Subramanian suggested that India’s positive growth despite this negative trend is because of fudging of the official growth numbers. But the question that arises here is why IMF numbers are similar to the ones provided by the Indian government? The answer lies in the fact that IMF and World Bank take the numbers provided by the country and then their analysts make some changes based upon their own criteria. Therefore, the right numbers are never shown to the general public. But there are other analysts who suggest the converse of this. They say that taking only some indicators into account is not good enough to suggest that official numbers are fudged.  But still, Subramanian and other analysts on his side still have an important case which has to be taken into consideration.

It is still the case that Indian economy has hit a slowdown and serious steps have to be taken into consideration and a strong implementation of these measures has to be done. Along with that, IMF and World Bank have to stop blindly accepting national growth rates and ‘fact check’ the nations’ government. Especially at this time when talking about India, they have to raise concern and come out and suggest that India is barely in a positive territory. They have to stop being so timid and tell the emperor that he barely has clothes on.