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Indian economy is expected to grow at 7 to 7.5 percent in 2016: Kaushik Basu

30 Dec 2015 Evaluate

Ahead of the World Bank review of the growth projections of countries on January 7 or 8, World Bank chief economist Kaushik Basu has said that the Indian economy is expected to grow at 7 to 7.5 percent in 2016. Though the numbers are lower than early expected, but Kaushik Basu said that “Roughly it is in a ballpark of the kind of figure. We (World Bank) have given over 7 percent or somewhere between 7 and 7.5 percent which no matter whether the top-end of it or bottom end of it. India will still be the leader among major economies. Not only in 2015 but we expect India to lead that chart in 2016 as well”.

Every six months the World Bank takes stock of the whole global situation and puts out forecast. Until October, the World Bank retained India's growth forecast at 7.5 percent for 2015-16 and expected it to be 7.8 percent in 2016-17 and 7.9 percent in 2017-18.

Talking on impact of the rate hike by the US Fed on investment scenario in the country, Basu said that there could be some outflow of investments but the impact is minimal. Regarding exports, Basu said India needs to focus more on manufacturing-based exports as wages are rising, situation in China is on the rising path. He said that 'I think India has great potential in exports and in particular in the manufacturing sector. In manufacturing historically India has done well. The opportunity in the manufacturing sector is very high especially since wages are rising in China. But it is true that that over last 12 months if you look at the trend in exports we have not done well. He also said the ease of doing business is improving when compared to last year and the trend may contribute for higher exports in the long run.

Earlier, the World Bank chief economist Kaushik Basu had indicated that the bank may revise its GDP growth projection for India after it goes for a stock-taking in a few months. He had said that decision-making and reforms can have an impact in terms of growth rate and the fact that a couple of important decisions did not go through could have an impact.

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