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Apr 12, 2008

India's GDP to shrink by 1.25%: IMF

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The International Monetary Fund (IMF) on Friday said that the economic growth of India would decrease by 1.25 per cent to 7. 9 per cent, on account of tight monetary conditions and high inflation pressure. The inflation has touched to high 7. 41 per cent. The high inflation may affect the economy in many ways. Considering the high inflation rate, the IMF has warned that the inflation would affect the investment. Meanwhile, the RBI will announce its credit policy on April 29.

RBI would take the anti-inflationary measures with prominent in the credit policy. It is expected that in order to check the supply side of the RBI would increase the Cash Reserve Ratio (CRR). However, earlier the Asian Development Bank warned that the inflationary pressures in India to persist for the next few months. This would the crucial period for India to maintain its pace towards the double digit GDP growth rate.


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