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The International Monetary Fund (IMF) has "corrected" an error in its calculations on India's economic growth, saying that it expects the country to become a $5 trillion economy by FY27, up from its earlier prediction of FY29.
“IMF staff discovered a data input error that led to an error in calculating India's gross domestic product (GDP) denominated in US dollars, which was corrected,” Luis E Breuer, senior resident representative — India, Nepal, and Bhutan.
“More broadly, the Indian economy is recovering well from the pandemic with real GDP estimated to have recovered to above its pre-pandemic level by end of March 2022. The recovery is expected to continue although it is facing downside risks, including from external factors,” Breuer said.
India’s Chief Economic Advisor said the IMF has taken rupee depreciation against the dollar much sharper than what is implied by the US-India inflation differential that the fund has forecast, the report said. In contrast, China's nominal GDP is computed differently.
The inflation rate in China is projected to be lower than that of the US over the forecasting period. “But the Yuan appreciates much more than what is implied by the inflation differential in the fund’s projections. In the case of India, the rupee depreciates much more than what is implied by the inflation differential. As a result, the gap between China's dollar GDP and India’s dollar GDP widens,” he said.
In dollar terms, India’s GDP was projected by the IMF in April lagging China's by $14.42 trillion during 2021 (2021-22 in case of India). The difference was projected to widen to $16.62 trillion the next year and further to $24.21 trillion by 2027 (2027-28 in case of India). However, new numbers put up by the IMF pegged India's GDP behind China's by $14.28 trillion in 2021, $16.38 trillion the following year and $23.6 trillion in 2027.
