OECD forecasts 5.4% GDP growth for India
Teturning to the 8% growth seen in the first decade of the 2000s will require sustained effort to expand manufacturing and upgrade infrastructure, the group said.
The Paris-based club of advanced economies presented its latest forecasts for India on a market-price basis; most computations of India's economic output are done on a factor-cost basis.
The OECD said it expects Indian growth to edge up to 6.6% in the year ending March 2016. Consumer-price inflation is forecast to come in at 7.1% in the current fiscal year.
The OECD survey said higher growth would be sustained only through structural overhauls such as improving the cumbersome business environment and reducing government spending on food, fuel and other subsidies to fund more infrastructure development.
The report also recommended cleaning up banks' balance sheets, increasing female participation in the labor force and adopting a formal inflation target.
The report also noted that Delhi hasn't pursued many of the policy actions that were recommended in the OECD's previous India surveys. The group has advised reducing corporate-tax exemptions, radically overhauling labor protections, opening up the government bond market and streamlining import tariffs. None of these have materialized since the 2011 survey. ■