HYDERABAD: The Indian economy is expected to grow at 5.5 per cent this fiscal, 6.3 per cent and 6.6 per cent in the following two financial years respectively, said the World Bank in its Global Economic Prospects report released on Wednesday.
“The financial health of economies has improved. With the exception of China and Russia, stock markets have done well in emerging economies, notably, India and Indonesia,” said Kaushik Basu, Senior Vice-President and chief economist, World Bank.
He added that gradual tightening of fiscal policy and structural reforms were desirable to restore fiscal space depleted by the 2008 financial crisis. “In brief, now is the time to prepare for the next crisis,” he said.
According to the World Bank, most of the acceleration is localised in India, supported by a gradual pick-up of domestic investment and rising global demand.
However, the Bank lowered its forecasts for developing countries to 4.8 per cent this fiscal, down from its January estimate of 5.3 per cent. Developing countries are headed for a year of disappointing growth, as first quarter weakness in 2014 has delayed an expected pick-up in economic activity, it said.
But, going further, growth is likely to strengthen in 2015 and 2016 to 5.4 per cent and 5.5 per cent respectively.
Similarly, global economy is expected to gather pace as the year progresses and is projected to expand by 2.8 per cent this year, strengthening to 3.4 per cent and 3.5 per cent in 2015 and 2016 respectively.
High-income economies will contribue about half of global growth in 2015 and 2016, compared with less than 40 per cent in 2013, providing an important impetus for developing countries, the Bank said.
According to the Bank, growth in South Asia was 2.6 per cent below average growth in 2003-12 but an improving global growth and a modest pick-up in industrial activity should help lift South Asia’s growth to 5.3 per cent in 2014, rising to 5.9 per cent in 2015 and 6.3 per cent in 2016.
Gradually reduce fiscal deficit: IMF
New Delhi: To bolster economic growth, India should continue to gradually bring down the fiscal deficit and usher in fuel subsidy reforms, a senior International Monetary Fund official said. Inflation, which has been at high levels, is also a key challenge for the country, Thomas J Richardson, the IMF's Senior Resident Representative in India and Nepal, said here on Wednesday. "It is important to continue the gradual process of bringing the fiscal deficit from relatively high levels to lower levels...it will help reduce vulnerability to external shocks and make India more durable for international investors as well as for domestic investors," Richardson said.