Additional comfort for the Government must come from the recent “surgical strikes” across LOC, however nebulous the dimensions thereof are, which have helped to create greater confidence, in the aftermath of Uri incidents of September 18, in our ability to safeguard effectively our borders against incursions by Pakistan-based militants.

For its part, IMF has marginally revised up its July GDP projection of 7.4 per cent to 7.6 per cent for both 2016 and 2017 (at market prices) and has noted India's 'robust growth' and status as the fastest-growing economy which, along with rebalancing China, sustain global growth in a world of subdued demand. But it has a large agenda for deliverables by India.

In its World Economic Outlook (WEO), prior to annual Fund-Bank meetings, IMF estimates the weakened world economy to grow at 3.1 per cent in 2016 ( in PPP terms and 2.4 per cent at market-based exchange rates) while global trade growth on deceleration may be less than 2 per cent in 2016. The trade decline is attributed to both lack of investments globally and a rise in protectionist trends.

Among advanced economies, WEO reports a loss of momentum in US growth with weakness in non-residential and fixed investment,especially in energy sector, though consumption has remained strong and labour market (employment) holds firm. The projected rise in global growth to 3.4 per cent in 2017 thus hinges crucially on rise in growth in emerging and other developing economies, and recovery in US, IMF says.

Prospects differ sharply across countries and regions, with emerging Asia in general and India in particular showing robust growth and sub-Saharan Africa experiencing a sharp slowdown. Inflation in emerging market and developing economies is steady and capital flows into emerging markets have recovered since February, according to WEO.

China, the world's second largest economy, now rebalancing, is expected to grow by 6.6 percent in 2016 and slow to 6.2 percent in 2017 absent further stimulus. IMF cautions on spillovers from China’s economy impacting on trade and global commodity prices. With its bigger global role, it is important for China to address internal imbalances to approach smoothly a sustainable consumption- and service-oriented growth, IMF said,

Devoting a large section in its narration for India, WEO notes GDP will continue to expand at the fastest pace among major economies. The 7.6 per cent growth is assumed from 'large terms-of-trade gains, positive policy actions, structural reforms' including GST, and adoption of inflation-targeting framework.

Improved confidence is expected to support consumer demand and investment, but,n the near term, private investment will likely be constrained by weakened corporate and public sector bank balance sheets.

While India has benefited from the large terms of trade gain triggered by lower commodity prices and inflation has declined, underlying pressures arising from bottlenecks in food storage and distribution sector point to the need for further structural reforms to ensure CPI inflation remains within the target band over the medium term.

IMF estimates CPI to hover at 5.5 per cent in 2016 (as against 4.9 per cent in 2015) and lower to 5.2 per cent in 2017. A slight increase, however, is projected in current account deficit from -1.1 per cent of GDP in 2015 to -1.4 per cent in 2016 and to -2.0 per cent in 2017, possibly on the assumption of a larger turnover in trade and financial flows both ways.

The WEO said important policy actions taken toward GST implementation would be positive for investment and growth. This tax reform and the elimination of poorly targeted subsidies are needed to widen the revenue base and 'expand the fiscal envelope to support investment in infrastructure, education, and health care'.

The Outlook also calls for additional measures to enhance efficiency in the mining sector and increase electricity generation to boost productive capacity. 'Additional labor market reforms to reduce rigidities are essential for maximizing the employment potential of the demographic dividend and making growth more inclusive.'

On public sector banks, IMF has urged continued efforts by the Reserve Bank of India to strengthen bank balance sheets through full recognition of losses and increasing bank capital buffers which are 'critical for improving the quality of domestic financial intermediation'.

In other major emerging economies, both Russia and Brazil remain in contraction in 2016 for the second year but now seem closer to exit recession and register modest growth in 2017 with Russia at 1.8 per cent and Brazil at 0.5 per cent.

Apart from the subdued outlook for advanced economies with uncertainty surrounding the UK vote to leave EU – the two-year negotiation on which is to start after March 17 – and expected reduction in trade and financial flows between UK and EU over the medium term, IMF also refers to growing economic, political and institutional uncertainty adding to global pressures for populist and inward-looking policies.

The Brexit vote and the ongoing U.S. presidential election campaign have highlighted “a fraying consensus” about the benefits of cross-border economic integration. “Concerns about the impact of foreign competition on jobs and wages in a context of weak growth have enhanced the appeal of protectionist policy approaches, with potential ramifications for global trade flows and integration more broadly.”, WEO recorded in its new appraisal of negative global trends .

Concerns about unequal (and widening) income distribution are rising, fueled by weak income growth as productivity dynamics remain disappointing, it said. Uncertainty about the evolution of these trends may lead firms to defer investment and hiring decisions, thus slowing near-term activity, while an inward-looking policy shift could also stoke further cross-border political discord.

IMF Economic Counsellor Maurice Obstfeld says in a forward to WEO that in general, centrifugal political forces across the European continent are making it harder to advance or even maintain economic reforms. Similar tensions afflict the U.S. political scene, where anti-immigrant and antitrade rhetoric have been prominent from the start of the current presidential election round. Across the world, protectionist trade measures have been on the rise. (IPA Service)