OECD raises FY16 growth forecast to 6.6%

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New Delhi | Published: November 20, 2014 4:31:01 AM

India’s economy is likely to grow at 6.6% in 2015-16, up from an earlier forecast made in May of 5.7%...

India’s economy is likely to grow at 6.6% in 2015-16, up from an earlier forecast made in May of 5.7%, the Organisation for Economic Cooperation and Development said on Wednesday.

The economy, which is recovering faster than the others that faced slowing growth, is expected to grow 5.4% this fiscal, the OECD said. Growth would edge up to 6.8 % in 2016-17, for which reviving manufacturing activities would be vital. “Reducing barriers to manufacturing growth, which has contributed relatively little to growth of GDP or exports, will be critical,” said the survey which also made a strong case for simpler and more flexible labour law.

To achieve 8% growth, India needs to reduce subsidies, spend more on social and physical infrastructure, bring a Goods and Services Tax and free up funds for infra. India also needs to improve the quality of fiscal consolidation at the Central and state level, OECD said.

According to it, India’s inflation, which is expected to be at 6.9% in 2014-15, would fall to 5.4% the next year and would edge up to 5.6% in the subsequent year. In an earlier forecast, OECD had said inflation would remain above 6% over the next few years.

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