Washington, April 26 : THE International Monetary Fund (IMF) on Thursday said India’s economic growth would slow down to 5.6 per cent in 2001 from 6 per cent in the previous year and suggested that it should promote private investment and contain deficit, which consume half the domestic saving, to remove the growth impediments.

At the same time it lauded the economic performance of the country in the face of worldwide slowdown saying it along with China would give the much needed ‘stability’ to the global economy.

Describing the Budgetary proposals as ‘reinvigorating commitment’ to structural reform, the Brettenwood twin said in its report that the central challenge to Indian policy makers “remains to sustain and improve upon the economy’s strong growth during the 1990s to support meaningful poverty reduction.”

It pointed out that even the Budget suggested the fiscal deficit might remain high, especially once privatisation receipts were not taken into account.

“This will require major structural reforms that improve the environment for private investment and a substantial reduction in the overall public sector deficit which at 10-11 per cent of Gross Domestic Products (GDP) consumed one-half of overall Gross Domestic Saving in 2000-01.”

Talking about India’s heavy reliance on imported oil, the IMF said the impact of higher world prices on the current account deficit has been largely offset by buoyant exports and sluggish non-oil imports.

Inflation too increased sharply in 2000 and early 2001 but “this appears to have mainly reflected the effects of adjustments in administered fuel prices, and price pressures have recently begun to ease.”

Despite India’s heavy Reliance on imported oil, says the IMF, the impact of higher world prices on the current account deficit has been largely offset by buoyant exports and sluggish non-oil imports.

The weakness of the rupee and the downward pressure on international reserves that emerged in 2000 have eased, aided by higher remittances from expatriate Indians, and the reserve bank of India was able to lower its bank rate in February and March 2001.

The 2001-02 Budget, says IMF, suggests that the fiscal deficit may remain high, especially once privatisation receipts are excluded from the calculations and taking into account the possibility that activity may be slower than expected.

China’s growth, meanwhile, is expected to slow down from 8 per cent in 2000 to 7 per cent in 2001 and pick up to 7.1 per cent in 2002, and India’s from 6.4 per cent in 2000 to 5.6 per cent in 2001 but pick up to 6.1 per cent in 2002. The US plunge is drastic-from 5 per cent in 2000 to 1.5 per cent in 2001, picking up to 2.4 per cent in 2002, according to current projections, it added. (PTI)