India's economic growth may rise from 7.5 percent in 2015-16 to 7.7 percent in ongoing fiscal on the back of strong private investment, more infrastructure spending, and better investment climate and improved corporate balance sheets, propelling South Asia to becoming the fastest-growing region globally, the World Bank has said.
In its South Asia Economic Focus report released in New York, the multilateral lender projected economic growth of the region to gradually accelerate from 7.1 percent in 2016 to 7.3 percent in 2017, and said given India's weight in the region, it sets the pace for the whole of South Asia.
"South Asia has been resilient to global turbulence due to its limited exposure to slowdowns in other major economies coupled with the tailwinds of favourable oil prices, capital flows, and remittances," said World Bank's South Asia vice president Annette Dixon.
The report said, of the region, that "fiscal and financial vulnerabilities remain and countries should strive to address them through generating revenue and creating more fiscal space".
India's GDP growth will be supported by a turnaround in agriculture rebound in rural demand and stimulus from government pay reforms, it said.
However, delays in implementation of key reforms could affect investor sentiment, it added.
The World Bank also said that favourable economic trends overall mask important underlying divergences like between urban and agricultural households, domestic and external demand and between public and private capital expenditure, which should be addressed.
Meanwhile on Tuesday, official data released in New Delhi showed India's factory output for February logged a growth of 2 percent after three straight months of decline, even as annual retail inflation fell to 4.83 percent in March from 5.26 percent in the month before.
The annual food inflation for the month also showed a decline to 5.21 percent from 5.30 percent. But the manufacturing sector continued to be pressured, barely managing a growth of 0.7 percent in February, as per data released by the Central Statistics Office.