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India's strong growth to depend on Modi-led reforms, says OECD

New Delhi: Indian economy, which is seeing signs of turn around, is poised to grow at 6.4 per cent in the next fiscal and stronger growth would depend on reforms being initiated by Prime Minister
PTI November 19, 2014 17:10 IST
PTI

New Delhi: Indian economy, which is seeing signs of turn around, is poised to grow at 6.4 per cent in the next fiscal and stronger growth would depend on reforms being initiated by Prime Minister Narendra Modi, says a report.

"The Indian economy is showing signs of a turnaround. 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," the OECD Economic Survey of India released here today said.

The survey released by OECD Chief Economist Catherine L Mann, found that the Indian exonomy slowed down more than many other countries since 2011, but is now recovering faster.

"Structural reforms would raise India's economic growth. In their absence, however, growth will remain below the 8 per cent growth rate achieved during the previous decade," it said.

For the current fiscal 2014-15, OCED has projected 5.4 per cent growth rate for India.

"The Indian economy is coming out of some tough times in recent years, with a steep decline in growth, stubbornly high inflation and a wide current account deficit, but the situation is now improving," said Mann.

"Key reforms in the business environment, to labour markets and to infrastructure will bring economic growth back to the higher levels seen in the recent past, create good jobs and improve well-being for all Indians," she added.

OECD said investment and exports are driving the rebound in India, 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," it said.

It said structural bottlenecks have taken a toll on economic growth and on the manufacturing sector in particular.

"Structural improvements to the business climate are crucial for medium term growth, and in the longer-term, health improvements and increased female participation in the labour market will sustain strong and inclusive growth."

It said infrastructure bottleneck, cumbersome business environment, complex and distorting taxes, inadequate education and training and outdated labour laws are increasingly impending growth and job creation.

"The Indian economy is coming out of some tough times in recent years, with a steep decline in growth, stubbornly high inflation and a wide current account deficit, but the situation is now improving," Mann said.