The India story has become the toast of international rating agencies and multilateral agencies. Close on the heels of similar projections by the IMF and World Bank, the Asian Development Bank (ADB) has projected India’s growth rate to surpass China’s to 7.8 percent in the next fiscal, and further growing at 8.2 percent in 2016-17.
Comparing the growth rate of the two countries, the ADB said that India’s growth rate will increase from 7.4 per cent in current fiscal year to 7.8 in 2015-16 and 8.2 percent in 2016-17. On the other hand, China’s growth rate will decelerate from 7.4 per cent in current fiscal to 7 percent in 2016-17.
“India is expected to grow faster than the People’s Republic of China in the next few years,” said ADB’s Chief Economist Shang-Jin Wei said. “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.”
The ADB’s chief economist said India’s economic prospects look promising, but added that “there are still many challenges.”
Thumbs-up for Make in India
The country’s “Make in India” initiative is further expected to push manufacture industries and urbanization. Shang was all praise India’s “Make in India” campaign, which is aimed at boosting domestic manufacturing. “”Indian government’s programme is even more striking (in comparison to China),” he said on an upbeat note.
The reform-minded Modi government plans to create 100 smart cities and sees the cities engines of economic growth and jobs. But it is also a big challenge for India. “To fully reap the benefits of urbanisation, the government must make continuous efforts to coordinate urban and industry planning to attract industries into urban cities, and provide the necessary supporting infrastructure,” said the ADB.
Alluding to the new monetary policy framework, in which the RBI’s primary objective is to maintain price stability while remaining mindful of growth, the ADB said: “It would help in restraining inflation and improve the coordination between monetary and fiscal policy.”
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