Saturday, March 12, 2016

ADB says India to remain fastest-growing economy in 2016


                               New Delhi: Pledging to increase lending to $12 billion in the next three years, Asian Development Bank president Takehiko Nakao on Friday showered all praise for India saying it is likely to remain the fastest growing economy in 2016 with GDP expanding more than 7 per cent.

Nakao, who met Finance Minister Arun Jaitley, praised India’s strong economic performance in the face of weak global growth and turmoil in commodity and financial markets.

“I believe India is likely to remain the fastest-growing large economy this year given the prudent macroeconomic management and the government’s efforts to improve the investment climate,” he said.

“The recent Budget also balances the urgent requirements for infrastructure investments with the need to reduce the fiscal deficit.”

ADB expects India’s economic growth will continue to exceed 7 per cent in fiscal year FY17.

Nakao commended the success of the country’s reform measures, including the liberalization of foreign direct investment rules, cuts in subsidies, and the “Make in India” campaign.

At the same time, he emphasized the importance of continuing reforms to boost the long-term growth potential of the Indian economy, noting the government’s efforts to unify the tax regime, make closing businesses easier, improve labor laws, and strengthen public sector banks.

To support the government’s commitment to build more infrastructure, Nakao said ADB will increase its lending to $10 billion to $12 billion for the 3 calendar years 2016 through 2018.

ADB will support flagship government projects such as solar parks and solar rooftops, energy efficiency using LED lighting, smart cities, metro lines, railway modernization, irrigation system expansion, economic corridors, and major ports.

On 8 March, Nakao met Reserve Bank of India Governor Raghuram Rajan and commended the RBI for its prudent monetary policy, which has contributed to strengthening external resilience.

Consumer price inflation averaged less than 5 per cent through most of 2015–16. The current account deficit declined to1.4 per cent of GDP in the first half of 2015–16, compared with 1.8 per cent in the first half of 2014–15.

Nakao said that the phased recapitalization of public sector banks, while simultaneously improving their governance structures, will help consolidate the financial sector.

Together with the central government’s higher public investment, which grew by more than 20 per cent in 2015–16, such measures will enhance private sector investment.

Nakao will speak at the high-level conference titled Advancing Asia: Investing for the Future, co-hosted by the Government of India and the IMF.
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