Currently, the top five largest economies are the US, China, Japan, Germany and United Kingdom. India ranks sixth with $2,454.458 billion nominal GDP.
The IMF observed that implementation of critical structural reforms, favorable terms of trade, and lower external vulnerabilities help India to achieve a higher rate of growth. IMF predicts 7.2% GDP growth rate for 2017-18 and tax reform like Goods and Services Tax would raise the country’s growth rate above 8% in the medium term.
“Higher world growth of 3.4% in 2017-18 & 3.6% in 2018-19 as per IMF prediction would help us in growing much faster,” India’s Finance Minister Arun Jaitley said.
Deteriorating repayment capacity of Indian industries, however, is a major worry for the Narendra Modi government as the non-performing assets of the commercial banks have gone beyond 16% of the total amount loaned.
Due to high bad debt ratio, lending growth is crippling in recent years which somehow is impacting manufacturing capacity and employment generation capability of the economy. “A significant share of debt in Argentina, Brazil, China, India, Nigeria, and Turkey is owed by firms with relatively constrained repayment capacity in terms of interest-coverage ratios, and in Turkey, a significant share of this debt is in foreign currencies,” the IMF said.
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