"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 on Tuesday. (Agencies)
Indian economy, according to Central Statistical Office (CSO), is estimated to record a growth rate of 4.9 percent in 2013-14, up from decade's low of 4.5 percent posted in the previous financial year. The economy has been growing at 9 percent 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 percent 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.
The Indian economy, ADB added, has remained constrained by slow industrial growth, contracting manufacturing output, weak investment and a reduction in private consumption.
The report further said that the current account deficit (CAD) is estimated to have narrowed sharply to 2.2 percent of GDP in 2013-14, from 4.7 percent a year earlier.
Sustained economic recovery will have to be led by improved investment and consumption, ADB report said.
It said the "progress by the Cabinet Committee on Investment in resolving delays in several large infrastructure projects is likely to provide traction in raising investment."
Moreover, it added, companies will be looking to see if actions are taken to improve the investment climate and improved global growth prospects bolster external demand.
"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 on Tuesday.