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India to grow at 7.8% in 2015-16; surpass China: ADB

The Asian Development Bank (ADB) on Tuesday projected India’s growth rate to surpass China and improve to 7.8 percent in next fiscal and further to 8.2 percent in 2016-17.

India’s growth and investor confidence will improve on the back of government’s structural reform agenda and improved external demand, the Asian Development Outlook (ADO), an annual publication of the ADB, said.

It forecast that India’s growth will improve from 7.4 percent in current fiscal to 7.8 percent in 2015-16 and further to 8.2 percent in 2016-17.

As regards China, the ADB projected the economic growth to decelerate from 7.4 percent in current fiscal to 7.2 percent next fiscal and 7 percent in 2016-17.

“India is expected to grow faster than the People?s Republic of China in the next few years. The government?s pro-investment attitude, improvements in the fiscal and current account deficits, and some forward movement on resolving structural bottlenecks have helped improve the business climate and make India attractive again to both domestic and foreign investors,” ADB Chief Economist Shang-Jin Wei said.

He, however, cautioned that although the economic prospects look promising, “there are still many challenges”.

ADB’s estimates is, however, lower than the 8-8.5 percent growth estimates of Indian government for the 2015-16 fiscal beginning April. It is better than 7.5 percent projection by the International Monetary Fund (IMF).

The ADB said that strong growth outlook is contingent on further acceleration in investment activity. “The prospects look promising”.

It said the measures undertaken by the government including accelerating environment clearances for infrastructure projects, easing the process of land acquisition for infrastructure and industrial corridors, allowing auction of coal mines to the private sector, and easing the compliance burden of labour laws on small? and medium-sized industries would help boost growth.

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