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World Bank Predicts 5.6% Growth for India
Oct 31, 2014

As per World Bank report, India is set for 5.6 percent growth in the fiscal year ending March 31, 2015. In its latest India Development Update, it predicted an acceleration in growth to 6.4 percent in fiscal 2016 and further to 7 percent in fiscal 2017.

The implementation of the Goods and Services Tax and the dismantling of inter-state check posts could significantly improve the competitiveness of Indian manufacturing. With economic reforms gaining momentum, long-term prospects for growth remain bright for India.

The report said, to realize its full potential, India needs to continue making progress on its domestic reforms agenda and encourage investments. The government's efforts at improving the performance of the manufacturing sector will lead to more jobs for young Indian women and men.

The report projected inflation to ease to 4.3 percent in the current fiscal, from 6.0 percent in the previous year. The FY 2014 current account deficit of 1.7 percent was forecast to widen marginally to 2.0 percent as import demand picks up and capital inflows rise.

While fiscal consolidation was expected to continue through expenditure restraint, there was room for revenue mobilization to strengthen.

India's longer term growth potential remains high due to favorable demographics, relatively high savings, recent policies and efforts to improve skills and education, and domestic market integration.

In addition, improved growth prospects in the US will support India's merchandise and services exports, while stronger remittance inflows and declining oil prices are expected to support domestic demand.

The risks to the projections include external shocks such as financial market disruptions arising out of changes in monetary policy in high income countries, slower global growth, higher oil prices, and adverse investor sentiment due to geo-political tensions in the Middle East and Eastern Europe.

On the domestic front, the risks include challenges to energy supply and fiscal pressures from weak revenue collection.


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