The World Bank projects India’s GDP growth rate expanding to 7.5 per cent in the current fiscal on account of increased economic activity and greater stability.
“India’s economic growth is expected to rise to 7.5 per cent in 2015-16, followed by further acceleration to 7.9 per cent in 2016-17 and 8 per cent in 2017-18,” it said in its India Development Update.
“However, acceleration in growth is conditional on the growth rate of investment picking up to 11 per cent from FY16 to FY18,” the World Bank said in the report, which was released on Tuesday.
In the Budget, the government had projected a GDP growth rate of 8.5 per cent this fiscal year.
The World Bank said the government has begun to implement reforms to unlock the country’s investment potential to improve the business environment, liberalise FDI, boost public and private investment in infrastructure, quickly resolve corporate disputes, simplify taxation and lower corporate taxes.
Riding on reforms States are set to receive more resources and spending power, and the government has reiterated its resolve to implement GST by April 2016, a move widely expected to meaningfully increase India’s tax-to-GDP ratio, it added.
To achieve higher investment growth, the report called for fiscal reforms that protect public capital spending, financial sector reforms, and reforms in the business environment, all of which can unlock private investment.
“The government has made progress in several policy areas, and long-term growth prospects remain bright,” said World Bank Country Director for India Onno Ruhl.
“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 to create jobs and become globally competitive,” Ruhl added. “...if this agenda is implemented, it carries great promise of an acceleration in economic growth,” he said