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Indian economy expected to expand by 7.2 percent this fiscal: OECD

10 Nov 2015 Evaluate

In a morale booster to the government, Paris-based think tank the Organisation for Economic Cooperation and Development (OECD), despite cutting the global growth forecast for this year to 2.9 percent citing a further sharp downturn in emerging market economies and world trade, has said that with ‘relatively robust’ growth prospects, the Indian economy is expected to expand by 7.2 percent this fiscal but difficulty in passing key structural reforms and large non-performing loans are holding it back.

The latest growth estimate for India is same as the forecast made in September by the think tank. In the current financial year, India is estimated to grow 7.2 percent, followed by 7.3 percent in 2016-17 and 7.4 percent in 2017-18 period, as per OECD. It has further said that India public investment has picked up with faster clearance of key projects while better infrastructure and greater ease of doing business are promoting private investments. More generous benefits and wages for public employees are supporting private consumption.

It further said that fiscal policy is assumed to remain supportive in India. Public investment in the energy, transport, sanitation, housing and social protection sectors is critical to raising living standards for all and can be financed through tax reform and reductions in subsidies.

OECD has said that a 'deeply concerning' slowdown in trade, particularly with China, will lead to lower global economic growth this year. Global GDP is now expected to grow by 2.9%, down from 3% forecast in September, but will hit 3.3% in 2016. The OECD has repeatedly cut its 2015 global growth outlook from the 3.7% it initially forecast last November. But in its bi-annual outlook, the organisation said stimulus measures in China and other countries would help the world economy speed up next year, before accelerating to 3.6% in 2017. China's growth is expected to slow to 6.8 percent this year and continue to decline gradually reaching 6.2 percent by 2017 as activity rebalances towards consumption and services.

The think tank has also called for the US Federal Reserve to go ahead with its first rate hike since the financial crisis as a recovery gains steam in the United States and Europe , despite a slowdown mostly centred on emerging markets and China.

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