World Bank pegs India’s growth at 7.5% in FY16

Tribune News Service

New Delhi, April 28

The Indian economy has turned the corner, says the latest update of the World Bank. It has projected India’s GDP to expand to 7.5% in the current fiscal on account of increased economic activity and greater stability.

World Bank said in its India Development Update report today that aided by a supportive external environment, in particular the sharp decline in oil and commodity prices, the Indian economy has taken strong strides towards higher growth and enhanced stability.

Growth has accelerated, inflation has declined, the current account deficit has narrowed, and external reserves have increased.

According to the Update, a biannual report on the Indian economy and its prospects, India’s economic growth is expected to rise to 7.5% in 2015-2016, followed by further acceleration to 7.9% in 2016-2017 and 8% in 2017-2018. However, acceleration in growth is conditional on the growth rate of investment picking up to 11% during FY2016-FY2018, it adds.

To achieve higher investment growth, the World Bank has called for fiscal reforms that protect public capital spending, financial sector reforms, and reforms in the business environment — all of which can help unlock private investments.

Specifically the report calls for the timely implementation of the Goods and Services Tax (GST), rationalising current expenditures, especially on subsidies, delivering on divestment plans, ensuring greater tax buoyancy than has been realised lately, encouraging PPP projects and addressing balance sheet issues of public sector banks.

“The government has made progress in several policy areas and long-term prospects for growth remain bright for India,” said Onno Ruhl, World Bank Country Director in India.

“The current situation offers an opportunity to further strengthen the business environment and enhance the quality of public spending. Continuous strong momentum in these reforms will further unleash the productivity that Indian firms need in order to create jobs and become globally competitive,” he added.