OECD sings for India, predicts 7.7 growth rate

Chak de India – the IMF chief’s cheery forecast for Indian economy has now been reinforced by an influential club of market economies. The Organisation for Economic Cooperation and Development (OECD), in its latest report, has projected that India, Asia’s third largest economy, is expected to become the fastest-growing major economy over the next two years.

In its ‘Interim Economic Assessment’, the OECD has forecast that the Indian economy will grow 7.7% in 2015 and 8% in 2016. China is projected to grow at 7% in both these years. The world economy is forecast to do moderately better than expected a few months ago. “The Indian economy is set to perform strongly, if key challenges can be overcome,” the Paris-based 34-member international economic organisation said.

“India is now expected to be the fastest-growing major economy in 2015-16, overtaking China,” the OECD said. However, it cautioned about obstacles that are emerging in the way of economic reforms which the Narendra Modi government has vowed to implement. In its previous assessment, in November 2014, the OECD had forecast 6.4% growth in 2015 and 6.6% in 2016.

“With obstacles emerging to the adoption of growth-friendly structural reforms, maintaining rapid growth will pose a difficult challenge, notwithstanding the strong current momentum,” it said. The low oil prices and monetary easing are providing support to global growth, the OECD said. “Lower oil prices and widespread monetary easing have brought the world economy to a turning point, with the potential for the acceleration of growth that has been needed in many countries,” said OECD chief economist Catherine L Mann.