The Asian Development Bank (ADB) on Thursday retained India's growth projection for the current fiscal at 7.8%, making it the fastest growing economy, but cautioned that delay in land and taxation reforms could hinder growth.
In its Supplement to the Asian Development Outlook, which was released in March, ADB lowered China's growth forecast to 7% for 2015, from the earlier 7.2%.
For 2016, it is forecast to decelerate to 6.8%. "India's growth forecasts remain at 7.8% for this fiscal year and 8.2% for next, supported by a healthy monsoon and new investment — and assuming concrete progress on reform," Asian Development Bank said.
Indian economy grew 7.3% in 2014-15.It also added that "risks to growth prospects could emerge from further delay in passing some legislations crucial to easing land acquisition for industry and to implementing a uniform goods and services tax (GST)".
The land acquisition bill, which aims to make it easier for industry to acquire land for industrial corridors and other purposes, is facing stiff political opposition.
The GST Bill, is currently being scrutinised by a Rajya Sabha Parliamentary Committee. The government proposes to roll out GST, which would subsume excise, service tax and other local levies, from April 2016.
As regards the price situation, ADB said inflation remains low in India. It retained 2015 and 2016 inflation forecast at 5% and 5.5% respectively.
ADB's estimates is, however, lower than the 8-8.5% growth estimates of Indian government for the 2015-16 fiscal beginning April.
It is better than 7.5% projection by the International Monetary Fund (IMF).ADB has also trimmed the growth projection for developing Asia because of subdued economic activity in US and China.
It expects developing Asia to grow at 6.1% in 2015, slower than 6.3% estimated earlier.