World Bank pegs India’s growth at 8 percent next fiscal

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Washington, April 14: The World Bank has forecast India’s growth accelerating to 8 percent for the next fiscal and said the country is well-placed in a region that has not only logged the highest economic expansion but would benefit the most from cheap oil.

According to the bank’s South Asia Economic Focus report, which is released twice a year, the exports sector in the region remains a cause for worry, even as the cheaper oil import bill should now trigger a complete revamp of fuel subsidy regime.

The new projections come soon after international credit rating agency Moody’s revised India’s sovereign ratings outlook to “positive” from “stable”. Another major ratings agency Fitch reaffirmed its stable outlook on India.

The think-tank of the rich nations, the Organisation for Economic Cooperation and Development (OECD), also endorsed India’s economic expansion projections.

“The biggest oil price dividend to be cashed in by South Asia is one yet to be earned, but it is not one that will automatically transit through government or consumer accounts,” said World Bank South Asia Chief Economist Martin Rama.

“Cheap oil gives the opportunity to rationalize energy prices, reducing the fiscal burden from subsidies and contributing to environmental sustainability,” he added.

According to the World Bank, India’s GDP (gross domestic product) growth is expected to accelerate to 7.5 percent in fiscal 2015-16.

“It could reach 8 percent in fiscal 2017-18, on the back of significant acceleration of investment growth to 12 percent during (FY2016-FY2018),” the economic focus report said.

“The country is attempting to shift from consumption- to investment-led growth, at a time when China is undergoing the opposite transition,” the report added.

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