The recent Pakistani and Indian steps to bolster bilateral trade will positively affect growth momentum, the International Monetary Fund. However, Laura Papi, Assistant Director, IMF, said the move alone would not be enough to help New Delhi get back on high economic growth track. “It would definitely have some positive effects. But not sufficient by itself to bring India back to 8 percent,” she said. The official noted that some trade between India and Pakistan is probably at the moment intermediated by other countries. “Of course to the extent that it becomes bilateral, the cost of trading will be reduced and will have a positive impact on growth, but it will not be all new trade. Overall definitely it is a positive move,” Papi said, when asked about the likely impact of increased bilateral trade on growth prospects. She was answering a question in the light of 2013 staff report on Indian economic scenario, which recommends a series of steps for India to reclaim its robust growth momentum. According to the Fund, India’s growth is projected at about 5½ percent for 2012/13, but should pick up to 6 percent in 2013/14. The outlook, she explained, is for subdued growth and a fairly modest recovery for this year still accompanied by quite high inflation and elevated current account deficit. “The reason for this subdued outlook is that investment has slowed significantly and we see some supply-side issues such as supply bottlenecks as having played an important part in lower investment growth and because of this we have also revised down our medium-term growth projections, she said of Indian immediate growth prospects.
