Entrepreneurial spirit to push India\'s economic growth by 6.4 per cent in 2015-16: World Bank

A Modi dividend could lift India's economic growth to 6.4 per cent in 2015-16, the World Bank has said, referring to a possible boost to the animal spirits of entrepreneurs, according to a report published in Economic Times.

"The Indian economy, 80 per cent of the (South Asia) region's output, is set to grow by 6.4 per cent in 2015-16 after 5.6 per cent in 2014-15...India is benefiting from a Modi dividend," noted the World Bank's bi-annual report, South Asia Economic Focus.

The World Bank calls for structural reforms and prudent macroeconomic management for a better medium-term outcome. "The Modi effect is definitely playing out as far as capital inflows are concerned. Inflation needs to trend downwards, but the external and fiscal positions look very promising," Soumya Kanti Ghosh, Chief Economic Adviser, SBI told ET.

He added that the current year's growth could turn out to be higher than the 5.6 per cent estimated by the World Bank. As far as India's giant neighbour is concerned, the World Bank has estimated that China's growth will slow to 7.2 per cent next year, a cut from the 7.5 per cent estimated in April this year.

India's economic growth will accelerate to touch the 7per cent mark in 2016-17, according to the report, which took note of recent policy measures undertaken. These include liberalisation of foreign direct investment in railways and defence, disbanding of the Planning Commission and its replacement by an economic advisory body, financial inclusion as well as actions to simplify land acquisition and reform labour laws.

India's economy turned around sharply in the first quarter of 2014-15 to grow at 5.8 per cent, bucking the dismal sub-5 per cent growth of the last two years. "India's growth performance remains strong vis-a-vis emerging market peers," the World Bank said.

“All economic indicators look positive, aided by the base effect and actual recovery in some areas. But there is a lot of resolution shown by the government in areas like fiscal deficit and current account deficit. We expect economy to see an all round recovery soon," Madan Sabnavis, chief economist, CARE Ratings told ET.