In a morale boost up for the country, United Nations in its report named World Economic Situation and Prospects 2016 has said that India which accounts for over 70 per cent of South Asia's GDP will be the world's fastest growing large economy at 7.3 per cent in 2016, improving further to 7.5 per cent in the following year, slightly up from an estimated 7.2 per cent in 2015. The report also said that South Asia is expected to be the world's fastest-growing region in 2016 and 2017.
The report which is produced annually by the UN Department of Economic and Social Affairs (UN/DESA), the UN Conference on Trade and Development (UNCTAD), the five UN regional commissions and the World Tourism Organisation, highlighting the positive sides, stated that compared to other countries of the region, the macroeconomic environment in India has improved, due to sharp decline in the prices of oil, metals and food. Further it said that although India's government is facing difficulties in implementing its wide-ranging reform agenda and some economic indicators, such as industrial production remain volatile, the consumer and investor confidence has risen.
Underscoring the need to implement fiscal reforms that boost the government revenues, the report said that despite some recent progress, fiscal positions remain generally weak owing to the small tax base, poor tax administration and the large expenditures required for closing the infrastructure and energy gaps and maintaining internal security.
Furthermore, UN report sees majority of the countries in South Asia to see accelerated growth over the next two years on the back of strong private consumption as the main driver of growth, offsetting relatively tight fiscal policies and sluggish exports. Highlighting the challenges for South Asia, the UN report said countries like India, Bangladesh, Iran and Nepal have narrowed their fiscal deficits in 2015, however, weaknesses are there.