The Indian economy is expected to grow 5.5% in 2014-15 on the back of an improved performance in industry and services and will inch up to 6% in 2015-16 as external demand improves due to the strength in advanced economies, the Asian Development Bank (ADB) said on Tuesday.
The government’s moves to open up some of the structural bottlenecks that have impeded industry and investment is also likely to have an impact on overall growth, the ADB said in its latest outlook. However, it cautioned that economic recovery would be a long haul.
“Economic recovery would have to be led by improved investment and consumption, but the prospects do not appear promising at this stage. Elevated inflation, a tight monetary stance, and a weak currency will continue to constrain spending. Further, fiscal austerity is likely to be an additional drag on growth,” the ADB said. It said the Cabinet Committee on Investment has cleared projects worth $89 billion, or 4.8% of GDP, and this is likely to provide some traction towards resolving issues with some of the stalled projects.
It said that better growth prospects in the US and the euro area will likely bolster external demand.
The government’s moves to open up some of the structural bottlenecks that have impeded industry and investment is also likely to have an impact on overall growth, the ADB said in its latest outlook. However, it cautioned that economic recovery would be a long haul.
“Economic recovery would have to be led by improved investment and consumption, but the prospects do not appear promising at this stage. Elevated inflation, a tight monetary stance, and a weak currency will continue to constrain spending. Further, fiscal austerity is likely to be an additional drag on growth,” the ADB said. It said the Cabinet Committee on Investment has cleared projects worth $89 billion, or 4.8% of GDP, and this is likely to provide some traction towards resolving issues with some of the stalled projects.
It said that better growth prospects in the US and the euro area will likely bolster external demand.
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