The World Bank expects India's economy to grow at 5.5 per cent in the current financial year and 6.3 per cent in 2015-16, the World Bank said Friday.
According to the 'Global Economic Prospects 2014' report released by the World Bank in New Delhi on Friday, India's economic growth is estimated to accelerate further to 6.6 per cent in 2016-17.
"With a rising global demand, we expect that a rebound in domestic investments and a pick-up in manufacturing activity will help India move from two years of sub-5 per cent growth to over 6 per cent in the next year," said Onno Ruhl, the World Bank's country director, India.
"Removing bottlenecks in energy supply, improving the business climate, and unlocking stalled PPP (public-private partnership) contracts are some of the key areas that could be addressed in the short term to bring India back to a high growth trajectory," Ruhl said at a media conference.
Unlike most developing countries, India's recent growth has been well below potential, which provides space for economic activity to accelerate without building inflationary pressures. "This comes at a time when the outlook for most other developing countries is largely flat as they have by now recovered from the crisis and are growing close to potential," the report said.
Ruhl suggested short and medium-term priorities that could help India regain its growth momentum and progress in poverty reduction. These included particularly removing immediate bottlenecks to growth and improving the business environment by reducing the regulatory and compliance costs for companies.
Revitalising the power sector by improving the performance of distribution utilities, and ensuring that players in the sector are subjected to financial discipline, is another necessary step, the World Bank economist said, perhaps reflecting the views of the Aam Admi Party leader Arvind Kejriwal.
Further investments in infrastructure, including re-pricing stranded PPP contracts and developing an integrated logistics strategy could address missing links in the transport system, he said.
Overall, the global economy is expected to pick up speed as the year progresses and is projected to expand by 2.8 per cent this year, strengthening to 3.4 per cent and 3.5 per cent in 2015 and 2016 respectively.
High-income economies will contribute to about half of global growth in 2015 and 2016, compared with less than 40 per cent in 2013.
Developed economies are projected to inject an additional $6.3 trillion to global demand over the next three years, which is significantly more than the $3.9 trillion increase they contributed during the past three years, and more than the expected contribution from developing countries.
The momentum will be led largely by continued recovery in the United States and the Euro zone, the report said.
(Alo see: Growth of over 6% could spell overheating for India sans reforms: World Bank)