NEW DELHI: The World Bank has maintained its growth forecast for the Indian economy for the current fiscal year and expects it to expand by 7.5% in 2015-16. It has backed implementation of three key reforms, including the Goods & Services Tax (GST), to sustain the momentum.
In its development update, a twice a year report on the Indian economy and its prospects, the bank expects growth to accelerate to 7.8% in 2016-2017 and 7.9% in 2017-2018. But it said acceleration in growth is conditional on the growth rate of investment picking up to 8.8% during 2016-2018. The Reserve Bank of India expects the economy to grow by 7.4% in the current fiscal year, while the government pegs it at over 7.5%. The International Monetary Fund expects growth to be 7.5%.
The update noted that while public investments have helped kick-start the investment cycle, increased participation of the private sector will be required going forward. In the near term, India is relatively well positioned to weather the global volatility. Its low trade exposure to China and considerable foreign exchange reserves provide ample buffer. In the medium term, however, the Indian economy is not immune to a slowdown in global demand and heightened volatility.
