In what should be music to the ears of the Narendra Modi government, the International Monetary Fund (IMF) has joined the World Bank in predicting that India's economic growth will surpass that of its neighbour and Asian economic powerhouse China by 2016.
The global lender said today that India is expected to grow at 6.3 per cent 2015 and 6.5 per cent in the next year, by when it is likely to cross China's growth rate.
In 2014, the domestic growth rate was 5.8 per cent against China's 7.4 per cent, said the World Economic Report update released by IMF. The country's growth rate in 2013 stood at five per cent as against China's 7.8 per cent.
The global organisation also termed the new Prime Minister Narendra Modi-led government's reforms as "promising", but added that implementation is key.
"I think the reform plans of the new Prime Minister are promising. We are going to have to see the speed of the implementation," said Gian Maria Milesi-Ferretti, deputy director in IMF's Research Department.
Responding to a question, the IMF official said the effect of the government's economic reforms would be difficult to predict as these are structural reforms and are growing gradually over the medium term.
"The key is going to be implementation," Milesi-Ferretti said.
According to the latest IMF report, the growth forecast for India is broadly unchanged, with the weaker external demand offset by a boost to trade from lower oil prices and a pickup in industrial and investment after policy reforms.
The IMF report said global growth will also get a fillip from lower oil prices, which to an important extent reflect higher supply.
This boost, however, is projected to be more than offset by negative factors, including weakness in investment as adjustment to diminished expectations about medium-term growth continues in many advanced and emerging market economies.
Global growth in 2015-16 is projected at 3.5 and 3.7 per cent, a downward revision of 0.3 percentage points relative to the October 2014 World Economic Outlook (WEO).
The revision reflects a reassessment of prospects in China, Russia, the euro area and Japan as well as weaker activity in some major oil exporters because of the slump in global oil prices.
The United States is the only major economy for which growth projections have been raised, the IMF said.
Investment growth in China declined in the third quarter of 2014, and leading indicators point to a further slowdown. (See: India could match China's growth within two years: World Bank).
Incidentally, earlier in 2009, the world Bank had made a similar projection for India to overtake China in 2010 (India to overtake China in GDP growth in 2010: World Bank)