IMF's GDP projections for India may prove correct: Pranab

NEW DELHI: Finance Minister Pranab Mukherjee today said that International Monetary Fund ( IMF) may prove correct in its assessment of India's economic growth, given the second quarter growth rate of 8.9 per cent, which has surpassed the assessment of various experts.

"I always go by conservative estimates... As per IMF (International Monetary Fund) estimates the GDP growth would be more than 9 per cent...IMF may be correct this time," Mukherjee said while commenting on the second quarter growth figures announced earlier in the day.

Last month the Washington-based IMF had cited surge in domestic demand for raising its economic growth forecast for India.

The IMF in its World Economic Outlook had projected 9.7 per cent growth for India in the current calendar year, up from 9.4 per cent estimated in July.

"Normally I don't agree with IMF. Perhaps this time I may agree with IMF," Mukherjee added.

The Fund uses different methodology for calculating GDP growth. While most other projections are based on gross domestic product at factor cost, IMF estimates economic growth on the basis of GDP at market price.

At the outset, IMF estimates also seemed surprising because the Fund was believed to be too conservative and earlier had been pegging India's economic growth at less than the official predictions.

The Indian economy (based on the conventional factor cost) grew by 8.6 per cent, 8.9 per cent and 8.9 per cent in the first three quarters of 2010.

"Low reliance on exports, accommodative policies and strong capital inflows have supported domestic activity and growth," the IMF had said in the report.

"The rapid pace of domestic activity, evidenced by rapidly rising inflation, led the central bank to increase the repo policy rate," it added.