With India expected to 'turn the corner' on the back of structural reforms, its economy is projected to clock 7 percent growth in 2015 even as China would see an economic slowdown, says a study.
Presenting predictions by its economists for the New Year, global consultancy PwC (Price waterhouse Coopers) said India is expected to resume growing at more than 6 percent after seeing expansion below this level since 2012, PTI reported.
"We think 2015 could be the year that India turns the corner, posting growth of around 7 percent. In the short term, low oil prices are likely to increase GDP growth, ease the pressures of India's high current account deficit and help bring down inflation," it said.
Regarding the country's medium term economic prospects, PwC said, "medium-term, we think that the February 2015 budget could see India take a step towards implementing new structural reforms which will boost the economy".
India's economic growth was below 5 percent in the last two financial years. The Reserve Bank of India forecast the economy to grow at 5.5 percent in 2014-15 (ending this March) and at 6.3 percent in next financial year 2015-16 (ending March 2016).
Global Growth
PwC said that even though China is expected to make the biggest contribution to global growth this year, its projected growth rate of 7.2 percent "would be its slowest since 1990 and its high debt levels pose some downside risks to that main scenario".
While the United States is expected to see the fastest growth in a decade, eurozone is anticipated to see quantitative easing program involving the purchase of government bonds, it noted.
As per the report, businesses should look out for three factors this year – oil prices, hard landing in China and escalation of geopolitical risks.
"Our predictions and projections assume that oil prices will average between $60-70 over the course of 2015 and finish the year at around $80. However, due to the highly unpredictable nature of oil prices, businesses should plan for different scenarios," PwC senior economist Richard Boxshall said.
Besides, an escalation of the geopolitical tensions in Russia and Ukraine as well as in the Middle East could have a negative influence on business confidence, with consequent implications for global growth, it added.
World Bank
Indian economy is likely to grow at 6.4 percent in 2015 and accelerate further in the next year on the back of steps being taken by the Narendra Modi-led NDA government, World Bank President Jim Yong Kim said on Sunday.
Speaking at the Vibrant Gujarat summit here, he said the World Bank was committed to catalyzing a vibrant India and there is much reason for optimism.
“We project that India will be a bright spot in an otherwise medium global economic outlook. (The) economy according to our projections is expected to grow 6.4 percent this year and even faster in 2016,” he said.
After slowing to sub-five percent growth in the previous two financial years, the economy has started showing signs of pick-up as it expanded by 5.7 percent and 5.3 percent in the second and third quarter of 2015.
The World Bank President said Modi and his government have been quickly putting in place the building blocks for even more rapid growth, streamlining national regulatory structure and promoting social inclusion.
Jim said, he was “very encouraged” by the recent proposal of a Constitution amendment bill for Goods and Services Tax.
The proposed new indirect tax regime, he said, offers an opportunity to make it substantially easier to do business in India.
“GST will create one common market and substantial saving for companies on logistics, especially if the structure of the GST is uniform,” he added.
He was also encouraged to see that the Prime Minister has focused on programs to promote the broad sharing of the benefits of growths.
The World Bank had a “deep interest” in promoting policies and supporting projects that maximize sustainable and inclusive economic growth, he added.
