India has criticised the International Monetary Fund for downgrading the country’s growth outlook.

Chief economic adviser Krishnamurthy Subramanian described the revised growth projection as “significantly off the mark” as the IMF cut the outlook to 9.5% for the fiscal year, 3% lower than the April forecast of 12.5%.

India’s growth forecast was downwardly revised by the IMF following a second outbreak of coronavirus cases as well as an “expected slow recovery in confidence from that setback.”

Subramanian said the IMF’s projection was fuelled by “saliency bias” and India was not in agreement with the downgrade, CNBC reports.

“Our projections were not as high as theirs, nor do we think that the revision is warranted,” Subramanian commented in relation to the size of the 3% downgrade. “I would say IMF is significantly off the mark.”

The government’s growth forecasts are in line with the central bank, which revised down its projected growth rate by 1% to 9.5% in June.
In addition, whilst speaking at a virtual industry conference in July, India’s chief economic adviser said he predicts India to grow between 6.5% to 7% from fiscal 2023.

Although a number of economists have said there are already indications of improvement in economic activity as Covid restrictions were relaxed, Kunal Kundu from Societe Generale warned that the green shoots emerging in India are “still patchy at this stage.”

He added that the country’s growth trajectory must be “carefully nurtured” as recovery is not as yet at full pace.

Moreover, retail inflation rose 6.26% year-on-year in June, followed a 6.3% rise in May.

Subramanian added he forecasts inflation to become range-bound: “I do expect it to be between the 5% to 6% range because the restrictions that were imposed due to the second wave did have some supply side impact and that’s why the prints have come for two months above 6%,” he said.