India likely to outstrip China in economic growth race

It appears that the reformist role played by the Modi-led government will propel India’s economic growth to surpass China’s in 2015, and the country would become the world's fastest-growing major economy. And the gap would further widen in 2016, the International Monetary Fund (IMF) and the World Bank have said in separate forecasts, mentions an Economic Times report.

According to the financial daily, both IMF and World Bank see India's growth rising to 7.5% in 2015 from 7.2% in the preceding year, but have different assessments for 2016. IMF, which last January forecast 2015 growth at 6.3% and 2016 growth at 6.5%, has pencilled in 7.5% growth next year while World Bank has the 2016 figure higher at 7.9%. The bank had last January pegged the growth rates at 6.4% this year and 7% in 2016. The Centre had budgeted 8.1-8.5% GDP growth in the year to end-March 2016.

The ET report also added the IMF and World Bank have predicted that India’s economic growth likely to outrun China in 2016 too.

In terms of economic potential, the Indian economy has never managed to surpass its giant neighbour China's growth rate, the business daily said, adding that even with a higher growth rate, the $2-trillion GDP of India will remain much smaller compared with China's $10-trillion economy.

The ET also stated that these estimates were released on Tuesday ahead of the IMF-World Bank spring meetings in Washington. Finance Minister Arun Jaitley is leading the Indian delegation, which includes RBI Governor Raghuram Rajan, to the meetings.

The latest numbers, which are a significant upgrade on earlier assessments, take into account the much-debated and questioned new national accounts numbers of the Central Statistics Office (CSO) as also reforms by the central government, the business daily added.

IMF's World Economic Outlook has pegged China's growth at 6.8% in 2015 and 6.3% in 2016. On the other hand, World Bank sees China growing at 7% in the next two years.

According to IMF, "India's growth is expected to strengthen from 7.2 per cent last year to 7.5 per cent this year and next. Growth will benefit from recent policy reforms, a consequent pickup in investment, and lower oil prices."

The strong growth in India has already made South Asia the fastest-growing region in the world, World Bank noted. As per the World Bank noted in its twice-yearly South Asia Economic Focus report, India's expected growth acceleration is being "driven by business-oriented reforms and improved investor sentiment" and that growth could reach 8% in fiscal year 2017-18 on the back of significant acceleration in investment growth, the ET concluded. (Image: Magazine3.com)