India projects 8% growth in 2015
PM Narendra Modi under pressure to begin economic reforms in 1st budget
A government report says India's economy will grow more than eight per cent in the upcoming financial year and appears to have shaken off its persistent problems of high inflation, rising budget deficits and poor domestic demand.
The Economic Survey, an annual report on the state of Asia's third-largest economy, said Friday that India appeared to have hit an economic "sweet spot" and was ready for "big bang reforms."
"A clear mandate for reform and a benign external environment now is expected to propel India on a double-digit trajectory," it said. The country, with about 1.25 billion people, needs high growth rates to create sufficient jobs for its burgeoning youth population.
India's Prime Minister Narendra Modi won national elections in May by a staggering majority on the back of a promise to revive the country's sputtering economy and create more jobs. But his government's interim budget in July was a damp squib.
Modi's first budget
Since then, Modi has brought in new economic advisers and there are big expectations for his government's first full-fledged budget, which will be announced on Saturday.
The Economic Survey forecast economic growth of between 8.1 per cent and 8.5 per cent for the financial year that starts April 1, which would make India the world's fastest growing economy, surpassing China.
However, the higher growth projections follow a revision of the baseline against which India calculated economic growth.
According to the new calculations India's economy is likely to grow 7.4 per cent in the current financial year ending in March.
High growth, high inflation
India's annual growth averaged about eight per cent in the decade up to 2010 but slumped to about five per cent in the following years.
The survey said the Indian economy would enjoy the benefits of economic reforms, lower global oil prices, low inflation and a normal monsoon next year. Inflation is expected to stay in a 5-5.5 per cent range.
It also forecast the government to stay within its fiscal deficit target of 4.1 per cent of GDP in the current year and lower that to 3 per cent in the medium-term.