IMF sees India's FY16 GDP growth at 7.5%

Ups FY15 growth forecast to 7.2%; says economy is recovering but more reforms are vital

India's economy is recovering and its ability to withstand external shocks has improved, but growth is likely to fall short of government targets, the International Monetary Fund said on Wednesday.

In an annual report, the IMF forecast that Asia's third-largest economy would grow by 7.5% in the 2015/16 fiscal year that starts on April 1, up from 7.2 percent in the year now ending.

That is less optimistic than the forecasts in Prime Minister Narendra Modi's annual budget, which foresees growth of up to 8.5% in 2015/16, thus making India the world's fastest-growing large economy ahead of China.

"The Indian economy is reviving, helped by positive policy actions that have improved confidence and lower global oil prices," the Washington-based lender said.

"To continue on this trend, India needs to revitalize the investment cycle and accelerate structural reforms."