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India will be leading economy this year: Care Ratings

Care Ratings was commenting on the recently released IMF World Economic Outlook.

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Indian rating agency, Care Ratings said that India will be the leading economy this year. Care Ratings was commenting on the just-released International Monetary Fund (IMF) World Economic Outlook report. 

The International Monetary Fund (IMF) predicted an acceleration in emerging markets, for the first time in six years, to 4.2%, which is tad higher than the July forecast of 4.1%. It further predicted an increase in global growth rate to 4.6% for the upcoming year.

For India, the report said that IMF projected a robust 7.6% growth rate, calling it the fastest growing among the world's major economies. Despite this, IMF urged the Indian government to continue reforming the tax system and eliminate subsidies to provide more resources for investments in infrastructure, education and healthcare, to push growth. 

Commenting on IMF's recommendations of proactive government spending and structural reform, Care Ratings said that they could be a hint for India to be flexible on the fiscal front in order to accelerate demand and growth. It also said that India will be the leading economy this year and that IMF's recommendations are already being worked on by the government. 

The IMF said that US' growth may fall to 1.6% from 2.2% projected in July, with a disappointing first half caused by weak business investment and diminishing pace of goods. It also stated that the Federal Reserve's policy rate should be "gradual and tied to clear signs that wages and prices are firming durably." The US Federal Reserve has been looking at all the signs from the economy, which may give it a chance to hike rates for the first time in nearly a decade. 

Saying that the "IMF is not convinced that the economy has turned around to pose a potential inflation threat", Care Ratings said that US' current economic scenario did not indicate that the Fed may lower rates in December. 

The rating agency also suggested that the crude oil prices will remain steady for some time. 

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