The World Bank on Thursday maintained its 2015-16 growth forecast for India at 7.5 percent, saying acceleration in growth will be gradual and conditional on the growth rate of investment picking up to 8.8 percent during FY16 to FY18.
The multilateral agency said in a report that it expects the country’s growth rate to accelerate to 7.8 percent in 2016-17 and 7.9 percent in 2017-18.
“While growth will very likely remain above 7 percent in the next fiscal year, there is significant uncertainty about the momentum of the economy,” the report says. It also makes a special mention of the efforts made by the government to bring current account deficit down to 1.4 percent in 2015-16.
Speaking at the launch of the report, World Bank India senior country economist Frederico Gil Sander lauded India’s efforts to eliminate petrol and diesel subsidies and increase excise taxes in response to the oil price collapse.
Gil Sander, however, noted that productivity and investment need to accelerate to match India’s ambitions of double-digit growth.”
To achieve its economic potential, the Narendra Modi government has been advised to focus on increasing export-oriented growth, improving the ease of doing business and boosting balance sheets of banks by addressing the underlying challenges in the infrastructure sector, especially power and roads.
Gil Sander pointed out that state-owned banks, which account for three-fourths of domestic credit, are under stress, with a rising share of non-performing assets.
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