India on track to 5.5% GDP growth; falling oil to help reforms: ADB

Says Indian govt has demonstrated willingness to tackle contentious reforms by eliminating diesel subsidies

India is on track to achieve projected 5.5% economic growth rate in 2014-15 as declining oil prices present a golden opportunity for many beneficial reforms, Asian Development Bank said today.

"India is on track to reach the growth forecast of 5.5% in FY2014 (ending 31 March 2015) after expanding by 5.7% in the first quarter and 5.3% in the second quarter," the Manila-based agency said.

"The growth outlook in developing Asia remains steady despite a slowed momentum in the second half of 2014, but declinng oil prices present a golden opportunity for many beneficial reforms in Asia," it said.

Falling global oil prices present a golden opportunity for importers like Indonesia and India to reform their costly fuel subsidy programmes, ADB Chief Economist Shang-Jin Wei said.

ADB said Indian government has demonstrated willingness to tackle contentious reforms by eliminating diesel subsidies, but it must extend its efforts to reach the forecast of 6.3% GDP growth in FY2015.

However, ADB lowered the GDP growth projection for the region to 6.1% in 2014, from 6.2% earlier, and to 6.2% in 2015, from 6.4% earlier.

Cutting the GDP forecast for China to 7.4% in 2014 from 7.5% earlier, and 7.2% in 2015 from 7.4%, ADB said the growth moderation in PAC is seen extending.

"The growth moderation in China is seen extending into the fourth quarter due to a continued real estate market correction and its spillover to the related sectors like construction," ADB said.