India to clock annual growth of 7.1% in 2015-19: Economist

Credits strengthening of economy to lower oil prices, says this has eased structural problems linked to high inflation

The Indian economy is expected to grow at an average annual rate of 7.1 per cent through 2019, but reform measures announced by the government are "no more than incremental improvements", the Economist Intelligence Unit (EIU) has said.

EIU, which is the research-arm of the London-based publication, The Economist, credited strengthening of the economy to lower oil prices, saying this has eased structural problems associated with high inflation.

"In its first full Budget the government pledged more money for much-needed roads and railways and cut some red tape for entrepreneurs. It relaxed slightly some fiscal deficit targets and increased spending on welfare.

All of these moves are positive, but are no more than incremental improvements. Owing to a new government methodology for calculating GDP, we now expect growth of 7.1 per cent a year in 2015-19, a full percentage point higher than earlier," the EIU global forecast report said.

The country recently switched to a newer system of GDP growth computation, which made it the fastest growing major economy in the world. Analysts still take the numbers with caution owing to absence of comparable back data.

On exchange rates, it said that the oil would continue to exert an influence over emerging-market currencies: those of large producers such as Russia have suffered significant depreciations, while those of importers such as India have shown much more resilience.

The rupee is currently hovering around 62 level against the US dollar at the Interbank Foreign Exchange.

The report further noted that "on balance, 2015 should be a better year for global growth than 2014, owing largely to an acceleration in the US, better growth in the euro zone and an improvement in several emerging markets, notably India".

Meanwhile, Finance Minister Arun Jaitley, has said that the country has the potential to make 9 to 10 per cent growth rate "a new normal".