Now UN says India to grow fastest in 2016

The UN forecast is identical to the International Monetary Fund's (IMF) growth projection for Indian announced earlier this week.

"As in other countries of the region, the macroeconomic environment in India has improved, helped by the sharp decline in the prices of oil, metals and food," the UN report said.

"Consumer and investor confidence has risen even as India's government faces difficulties in implementing its wide-ranging reform agenda and some economic indicators, such as industrial production, remain volatile," it added.

India is an exception in the global scene with improved macro economic foundations and economic reforms," said Nagesh Kumar, head of the UN Economic and Social Commission for Asia and the Pacific's (ESCAP) south and south-west Asia office in New Delhi.

"Spending on infrastructure, health and education is very low compared to other nations such as China in the region. The decline in oil prices of course provides some room to offset the burden of fuel bill," he said.

"So this is the time for India to recheck fiscal efforts and raise revenues and do more spending on some of the social sectors," he added.

Kumar also said that India must take a relook at its fiscal policy given the limitations of using monetary policy to spur economic growth. “This is a good time for the country to increase its spend on the social sector and on employment-creation activities, even if it means 'deviating' from fiscal consolidation goals for, say, a year,” he said. (SH)

Fibre2Fashion News Desk - India