WB Says India GDP to Grow By 5.6 Per Cent This Fiscal

World Bank said Asia’s third largest economy, India’s GDP is likely to expand by 5.6 per cent this fiscal as reforms gain momentum and the growth is expected to accelerate as proposed measures such as GST will give a boost to manufacturing sector.

In a report, titled 'India Development Update' the WB said, in the following years, the Gross Domestic Product (GDP) growth is likely to rise further to 6.4 per cent and 7 per cent in FY16 and FY17 respectively.

"India's economic growth is expected to rise to 5.6 per cent in FY15, followed by further acceleration to 6.4 per cent and 7 per cent in FY 2016 and FY 2017," said the World Bank report.

India's growth is likely to accelerate towards its high long-run potential and implementation of GST as well as dismantling of inter-state check posts can significantly improve the global competitiveness of Indian manufacturing firms.

"Implementing the GST will transform India into a common market, eliminate inefficient tax cascading, and go a long way in boosting the manufacturing sector.

Long term growth potential in India remains high on favourable demographics, high savings and recent policy and efforts to improve skills and education, it added.

"Improved growth prospects in the US will support India s merchandise and services exports, while stronger remittance inflows and declining oil prices are expected to support domestic demand," the report said.

The projections may face risks from external shocks, such as financial market disruptions on the back of monetary policy changes in high income countries, slower global growth, higher oil prices, and adverse investor sentiment on geo-political tensions in the Middle East and Eastern Europe.

In the domestic front energy supply, fiscal pressures from weak revenue collection in short term can pose challenges.