Indian Economy
A worker speaks on his mobile phone as he makes gear parts at a manufacturing unit in Kolkata, India, June 1, 2015.Reuters

The World Bank on Thursday kept its forecast for India's growth unchanged at 7.5% for the current fiscal, even as other agencies have cut their estimates after taking into account the slow pace of reforms and weak external conditions.

"The latest India Development Update expects India's economic growth to be at 7.5 per cent in 2015-16, followed by a further acceleration to 7.8 per cent in 2016-17 and 7.9 per cent in 2017-18," the World Bank said.

The growth would be subject to conditions, according to the bank.

"However, acceleration in growth is conditional on the growth rate of investment picking up to 8.8 per cent during FY16 to FY18," PTI quoted the World Bank as saying.

Earlier, this month, the International Monetary fund (IMF) had cut its forecast for India's gross domestic product (GDP) growth to 7.3% for 2015-16 from the earlier estimate of 7.5% made in July.

India has exploited the opportunity that resulted from a significant decline in global crude oil prices and commodity prices "to eliminate petrol and diesel subsidies and increase excise taxes," said World Bank India senior country economist Frederico Gil Sander.

The government had raised excise duty on diesel prices by Rs 5 per litre  between November last year and January this year, taking advantage of the 16% fall in global crude prices.

The tax component in diesel prices rose from 18% to 38% and on petrol prices, to 49% from 31% since November last year, according to Harshad Borawake, vice-president (research) at Motilal Oswal Securities Ltd.

Gil Sander said that India's growth outlook could face major risks from the banking sector and financing requirements of infrastructure companies.

"Public sector banks, which account for three-fourths of domestic credit, are under stress, with a rising share of non-performing assets," Gil Sander noted.

However, he said that India is well positioned to "weather" any negative impact from volatility in the global markets in the short-term.

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