Rising up from the stumbles of demonetisation, India's economic growth next year is expected to almost touch the 8 per cent mark by rebounding to 7.9 per cent fuelled by sound monetary policies and a boost from reforms, the United Nations (UN) said on Tuesday.
The mid-2017 update to the UN World Economic Situation and Prospects Report raised the figure by 0.3 per cent from 7.6 per cent projected at the beginning of this year.
“Despite temporary disruptions from the demonetisation policy, economic conditions in India remain robust, underpinned by sound fiscal and monetary policies and the implementation of key domestic reforms,” the report said.
However, for the current year, the report by the UN Department of Economic and Social Affairs (UNDESA) cut the growth rate by 0.4 per cent to only 7.3 per cent, down from the 7.7 per cent it forecast in January.
Last year's growth rate was 7 per cent, the report said.
India is expected to keep its lead as the world's fastest growing major economy in a world struggling to reach a 2.9 growth next year with the developed economies stuck at 1.8 per cent.
UNDESA, however, also warned that the "stressed balance sheets in the banking and corporate sectors will prevent a strong investment rebound in the near term" in India.
Next year's 7.9 per cent growth estimate for India is higher than the recent projections by other recent reports. Last month the International Monetary Fund fund forecast the growth rate to be 7.7 per cent during 2018-9.
The UN Economic and Social Council for Asia and the Pacific (ESCAP) 2017 survey last month said it expected India's economy to grow by 7.5 per cent next year.
For the current fiscal year, IMF's growth projection for India is 7.2 per cent. ESCAP pegged this year's growth at 7.1 per cent.
The report said that a cloud of uncertainty hung over the world economy. Faster than expected interest rate hikes by the US could set off capital outflows affecting emerging economies, it said.
Heightened uncertainty over international policy could hinder a strong rebound in private investment globally, it added.
Lenni Montiel, the Assistant Secretary-General for Economic Development, said in a statement releasing the report that there was a "need to reinvigorate global commitments to international policy coordination to achieve a balanced and sustained revival of global growth, ensuring that no regions are left behind".
On a positive note, the report said that global economic growth has strengthened in the last six months.
"Helped by a moderate recovery in trade and investment, world gross product is expected to expand by 2.7 per cent in 2017 and 2.9 per cent in 2018," it said. "While this marks a notable acceleration compared to 2016, growth in many regions remains below the levels needed for rapid progress towards achieving the Sustainable Development Goals" set by the UN for eradicating poverty.
China has the second highest projected growth rate of 6.5 per cent for this year and the next. East African region follows with a 6.5 per cent estimate for next year.
The US growth rate is projected to be flat at 2.1 per cent this next year and the next, up from 1.6 per cent last year. The European Union estimates are 1.7 per cent this year and the next, down from last year's 1.9 per cent.