The Indian economy is expected to grow at 5.5 percent in the current financial year and 6.3 percent in 2015-16, the World Bank said Friday.
According to the "Global Economic Prospects 2014" report released by the World Bank here, India's economic growth is estimated to accelerate to 6.6 percent in 2016-17.
"With a rising global demand, we expect that a rebound in domestic investments and a pick-up in manufacturing activity will help India move from two years of sub-5 percent growth to over-6 percent in the next year," said Onno Ruhl, World Bank Country Director, India.
"Removing bottlenecks in energy supply, improving the business climate, and unlocking stalled PPP contracts are some of the key areas that could be addressed in the short term to bring India back to a high growth trajectory," Ruhl said at a media conference here.
Unlike most developing countries, India's recent growth has been well below potential, which provides space for economic activity to accelerate without building inflationary pressures, the report said.
"This comes at a time when the outlook for most other developing countries is largely flat as they have by now recovered from the crisis and are growing close to potential," the report said.
Ruhl suggested short- and medium-term priorities that could help India regain its growth momentum and improve progress in poverty reduction.
Removal of immediate bottlenecks to growth will be crucial. Improving the business environment by reducing the regulatory and compliance costs for firms could help remove some of these hurdles.
Revitalizing the power sector, by improving the performance of distribution utilities, and ensuring that players in the sector are subjected to financial discipline is another step.
Further investments in infrastructure, including re-pricing stranded PPP contracts and developing an integrated logistics strategy could address missing links in the transport system, he said.
Overall, the global economy is expected to pick up speed as the year progresses and is projected to expand by 2.8 percent this year, strengthening to 3.4 percent and 3.5 percent in 2015 and 2016 respectively.
High-income economies will contribute to about half of global growth in 2015 and 2016, compared with less than 40 percent in 2013.
Developed economies are projected to inject an additional $6.3 trillion to global demand over the next three years, which is significantly more than the $3.9 trillion increase they contributed during the past three years, and more than the expected contribution from developing countries.
The momentum will be led largely by continued recovery in the United States and the Euro zone, the report said.