United Nations, Jan 14: Indian economy is likely to expand by 6.4 per cent this year, driving the economic growth in South Asia, according to a United Nations report which said progress in implementing much-needed structural reforms is likely to boost India's economic performance in 2015.
South and South-West Asia could witness an economic growth of 5.3 per cent in 2015, which will be a four-year high. "The positive outlook is mainly led by an increase in growth in India," the UN Economic and Social Commission for Asia and the Pacific (ESCAP) said in its 'Survey of Asia and the Pacific 2014: Year-end Update'.
The Indian economy is likely to expand by 6.4 per cent in 2015 as compared to 5.5 per cent last year.
"Positive expectations regarding the extent of reforms to be proposed and implemented" by the Narendra Modi-government boosted consumer and business confidence in the latter part of 2014, resulting in increased economic growth, it said.
The report said developing countries in Asia and the Pacific are forecast to grow at an average of 5.8 per cent this year, up from 5.6 per cent in 2014, spurred by decreased inflation and a steep decline in oil prices.
Structural reforms and lower oil prices can further boost grown for sustainable development. The growth in the Asia-Pacific region will be driven by improved growth in a range of developing economies, including Bangladesh, India, Indonesia, Papua New Guinea, Korea and Thailand.
Economies such as India and Indonesia are "expected to make progress in carrying out much-needed structural reforms under their new administrations, which is likely to boost their performance in 2015," it said.
The report, however, said that India experienced a negative contribution of investment to growth in the third quarter of 2014, which indicates the continuing pressing challenge of improving the business climate.
Consumer price inflation in November 2014 fell to its lowest level, declining to 4.4 per cent year-on-year, comfortably below the target of the Indian central bank for that year of 8 per cent and even approaching the 2016 target of 6 per cent.
It said it is likely that monetary policy can be eased a little in the near future if the trend of lower inflation stays intact, a move that would further support growth. The report projected inflation in India for 2015 to drop to 6.3 per cent from 6.7 per cent last year.
It said employment, social protection and welfare-related spending and reforms were also on the rise in the region. It cited the 'Make in India' programme launched by the new Indian government with the goal to make it easier to establish and operate a business in India.