New Delhi--India's economy will grow much faster than forecast this year and next and outpace rival China, the IMF said Tuesday, citing falling oil prices and a reform drive by the government of Prime Minister Narendra Modi.
The International Monetary Fund said in its World Economic Outlook update that Asia's number three economy would expand 7.5 percent in 2015, up from a 6.3 percent prediction made in January, and remain the same next year. It had previously tipped 6.5 percent expansion in 2016.
"Growth will benefit from recent policy reforms, a consequent pick-up in investment, and lower oil prices," the Washington-based Fund said.
Modi has lifted the cap on foreign investment in the defence and insurance sectors and announced a series of other initiatives since winning last year's general election on a pledge to reform and revive the economy.
The reforms have not been as bold as many businesses wanted, but the right-wing government's ongoing emphasis on pro-business policies has bolstered investor confidence.
India's government has forecast growth of 7.4 percent for the year which ended in March -- overtaking China and making India the world's fastest growing major economy, after changing the way it calculates gross domestic product.
The figures have surprised many economists as India had been thought to be struggling through its worst economic slowdown since the 1980s under the previous left-leaning government.
The IMF forecast China's economic growth would ease further to 6.8 percent this year from 7.4 percent last year, and slip to 6.3 percent in 2016.
India, a major oil importer, will continue to benefit hugely from tumbling oil prices which have helped to cool its once stubbornly high inflation, the IMF said.
Higher prices for food and other basic items cause huge hardship for India's tens of millions of poor.
AFP
