Driven by productivity enhancement and infrastructure development, India is expected to outpace Asian dragon China and become the fastest growing economy in the next four years, ICICI Bank said in a report.
“India is expected to grow at an average of 9.4 per cent in this decade and will outpace China by 2015, becoming the fastest growing economy,” ICICI Bank said in a report titled The India Book: Growth Opportunities and Challenges.
It added, however, that the rise in growth trajectory will lead to the widening of the current account deficit to an estimated 3.7 per cent of GDP by 2014-2015, which implies a rise in absorptive capacity for capital flows to $ 173 billion by FY’15.
Demographic dividend, besides other factors including productivity enhancement, technological advancement, infrastructural focus and deepening financial markets would catapult India into the high growth trajectory.
The Planning Commission is looking at 9-9.5 per cent GDP growth for the the 12th Plan period (2012-2017), from 8.2 per cent in the current plan.
The country is estimated to have recorded an annual growth rate of 8.2 per cent during the 11th Plan, against 9 per cent target. The performance was impacted by the global financial crisis and drought.
The study noted that the private domestic consumption demand is expected to average 10 per cent annually over this decade as compared to an average of 8 per cent over 2005-10.
The domestic demand for air conditioners and refrigerators is expected to grow more than seven times by 2020, the report said, adding that the cellular industry is expected to double its subscription base.
At the same time, the savings rate is expected to rise to 41.3 per cent of GDP by 2020 while the investment rate is likely to rise to 46.9 per cent of GDP during the same period, it said.
Financing of the infrastructure target would increase the reliance on foreign sources and raise the need for exploring innovative sources of financing, the report added.