India's GDP is poised to accelerate to 5.5 per cent in 2014-15 on the back of improved performance in industry and services but it may take some time for the country to reach its potential growth rate, says an Asian Development Bank (ADB) report.
"The recent deceleration of economic growth in India appears to have bottomed out, but the economy will not reach its potential until remaining structural bottlenecks are overcome", said the ADB Outlook 2014 released today.
Indian economy, according to Central Statistical Office (CSO), is estimated to record a growth rate of 4.9 per cent in 2013-14, up from decade's low of 4.5 per cent posted in the previous financial year. The economy has been growing at 9 per cent before the growth rate was pulled down by 2008 global financial meltdown.
"India's capacity for more rapid growth over the long term is high, with a promising outlook for labour, worker skills, capital, infrastructure, and productivity," ADB Deputy Chief Economist Juzhong Zhuang said, adding a serious effort on reforms would be needed to achieve and sustain higher rates of growth going forward.
The growth is expected to rise further to 6.0 per cent in 2015-16 as the recovery in advanced economies will bolster external demand and government actions are likely to remove some structural bottlenecks impeding industry and investment, says the ADB report.