Revising India's GDP upwards by 0.3% to 6.3% in 2015, Asian Development Bank (ADB) has said the economy shows a new promise of turnaround after the election brought a stable government in May.
"India shows new promise of a turnaround. After winning a decisive parliamentary election victory, the new (Modi-led) government is better positioned than the old to pursue the reform necessary to unlock the economy's growth potential.
"This Update maintains the 5.5% growth forecast for 2014 but upgrades....to 6.3%, the forecast for 2015, when reform can begin to bear fruit," ADB said in its Outlook 2014 Update released on Thursday.
The reform to stimulate investment, the timely award of environmental clearances, and measures to control inflation are expected to augment firming export demand from the major industrial economies, to boost economic growth, it said.
The new single-party government in India with the strongest mandate in three decades has outlined wide-ranging reforms, which will gradually overcome the difficult structural problems that have beset the economy and caused two years of slow growth and stagnant investment, it said.
"Public expectation of strong economic policy from the government is seen in record highs on the stock market and robust capital inflows.
"As demand from consumers and businesses continued to grow,...India's buoyant portfolio flows mean that financing the deficit should not be a problem, as capital flows are more resilient under global volatility this year than they were last year," the Update by ADB Chief Economist Shang-Jin Wei said.
Improving prospects in India will buoy the 2015 regional growth outlook somewhat, even as the growth path of China moderates, it added.
"Growth in Asia as a whole in 2014 is now expected to be higher at 5.4% on unexpectedly strong outcomes in Bangladesh, Nepal, Pakistan, as well as India." It said a greater momentum is expected in 2015 with South Asian growth now forecast at 6.1%, revised up from 5.8%.