New Delhi: The Asian Development Bank (ADB) on Tuesday projected that India’s growth rate will surpass that of China in 2015-16.

The Asian Development Outlook (ADO), an annual publication of the ADB, projected India’s growth to improve from 7.4% in current fiscal to 7.8% in 2015-16 and further to 8.2% in 2016-17. Meanwhile, ADB said China’s economic growth will likely decelerate from 7.4% in current fiscal to 7.2% in the next fiscal and 7% in 2016-17.

India’s growth and investor confidence will improve on the back of government’s structural reform agenda and improved external demand, according to ADB.

“India is expected to grow faster than the People’s Republic of China in the next few years. The government’s pro-investment attitude, improvements in the fiscal and current account deficits, and some forward movement on resolving structural bottlenecks have helped improve the business climate and make India attractive again to both domestic and foreign investors," ADB chief economist Shang-Jin Wei said.

He, however, cautioned that although the economic prospects look promising, “there are still many challenges".

ADB’s growth estimate for India for 2015-16, though better than the 7.5% projection by the International Monetary Fund (IMF), is lower than the 8-8.5% projection by the Indian government.

ADB said that India’s strong growth outlook is contingent on further acceleration in investment activity. “The prospects look promising". It said the measures undertaken by the government including accelerating environment clearances for infrastructure projects, easing the process of land acquisition, allowing auction of coal mines to the private sector, and easing the compliance burden of labour laws on small and medium-sized industries would help boost growth.

ADB said that India’s most pressing policy challenges is to promote cities as engines of economic growth and jobs. “To fully reap the benefits of urbanization, the government must make further efforts to coordinate urban and industry planning to attract industries into cities, and provide the necessary supporting infrastructure."

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