At this rate, India will grow faster than China where the economy is expected to slow down from 7.3 percent to 6.8 percent in 2015 and 6.3 percent in 2016, the IMF said.

The latest report on the region's economic health was released during  the ongoing annual World Bank-IMF meetings in Peruvian capital Lima.

"In India, the growth recovery has continued, supported by a pickup in domestic demand, on the back of strengthening industrial production and fixed investment," a report stated.

Lower global oil prices have also boosted economic activity in India and underpinned a further improvement in the current account and fiscal position and a sharp decline in inflation, the WEO said.

Forward-looking indicators such as the manufacturing and  services Purchasing Managers' Indices (PMIs) as well indicate improving activity, IMF said.However, export growth dropped sharply in the first half of 2015, partly reflecting subdued global demand.

With the revival of consumer and business sentiment, the incipient recovery of investment is expected to contribute more to growth going forward, the WEO said.

Although lower oil prices are supportive of domestic demand, weakened exports as well as headwinds from weaknesses in India's corporate and bank balance sheets will weigh on the economy, WEO added.

Though several policy actions have been taken recently in India, the WEO said that further steps are crucial to achieving faster and more inclusive growth.

These include relaxing longstanding supply bottlenecks, especially in the energy, mining, and power sectors, as well as labour and product market reforms, and improving the business climate. China, meanwhile, continues to rebalance its economy toward domestic consumption and services and away from credit-led investment.

Overall, the economy is expected to grow by 6.8 percent and 6.3 percent in 2015 and 2016, respectively, IMF said while making no revision relative to the April 2015 WEO despite increased downside risks.

While Asia's growth has recently disappointed, the region is expected to grow at a steady 5.4 percent in 2015-16, remaining the global growth leader, WEO noted.

All in all, despite its resilient outlook, Asia is facing a challenging economic environment, the WEO stated.


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