OECD estimates economy to grow at 5.4% this year, 6.6% next year

The Organisation of Economic Co-operation and Development has said that Indian economy is showing signs of turnaround.

In its latest Economic Survey of India, it estimated GDP growth at 5.4 per cent for current fiscal which is likely to accelerate to 6.6 per cent next year and 6.8 per cent in 2016-17. It noted that India slowed more than many other countries since 2011, but is now recovering faster.

It suggested that new reforms, some of which are included in the package presented by Prime Minister Narendra Modi, need to be implemented to put the country on "a path to strong, sustainable and inclusive growth".

It felt that investment and exports are driving the rebound, but growth will be sustained at a stronger pace if further steps are taken. In the near term, stable and lower inflation and smaller deficits are needed. "Structural improvement to the business climate are crucial for medium term growth and in the longer term, health improvement and increased female participation in the labour market will sustain strong and inclusive growth," it said.

The OECD identifies policies critical for future growth. It says India should formally adopt inflation targeting framework, which will help contain inflation expectations and provide support for savings and investment. It also suggests implementing a broad national value added tax better known as Goods and Services Tax or GST and cutting energy subsidies, as part of wider efforts to put public finances on a stronger footing.

COMMENT NOW