NEW DELHI: India's economic growth is expected to overtake China's by 2016, the International Monetary Fund (IMF)'s projection showed on Tuesday as the multilateral agency revised down global growth due to new risks.

IMF's World Economic Outlook update showed India's economy is expected to grow 6.5% in 2016-17, outpacing China's 6.3% expansion. India is estimated to grow 5.8% in 2014-15 and 6.3% in 2015-16, while China is forecast to expand 7.4% in 2014 and 6.8% in 2015. The government expects the growth to pick up to 5.5% in the current fiscal and then accelerate to 6-6.5% in 2015-16.

"In India, the growth forecast is broadly unchanged, however, as weaker external demand is offset by the boost to the terms of trade from lower oil prices and a pick-up in the industrial and investment activity after policy reforms," IMF's World Economic Outlook update said.

For India, data and forecasts are presented on a fiscal year basis and output growth is based on GDP at market prices. Corresponding growth rates for GDP at factor cost are 4.7, 5.6, 6.3, and 6.5% for 2013/14, 2014/15, 2015/16, and 2016/17, respectively, the IMF said. China's growth is for the calendar year.

Last week, World Bank had said that Indian economy is expected to catch up with China by 2016-17 and is expected to grow 6.4% in 2015 on the back of reform measures unveiled by the new government. China's blistering growth has cooled in recent months and is expected to slow further due to several factors, while in India growth is expected to pick up after two consecutive years of below 5% growth.

Expectations are that the reform measures unveiled by the Narendra Modi administration will help in accelerating the growth momentum. Easing of interest rates by Reserve Bank of India governor Raghuram Rajan earlier this month is also expected to help boost growth.

Modi has indicated his willingness to push economic reforms at top speed and make India a $20 trillion economy from the current $2 trillion within a few years.

While India outpacing China in terms of growth may come as good news for policymakers, the Modi government will have to cover huge ground to ensure that growth is sustainable for a number of years to help transform Asia's third-largest economy.

IMF said global growth is forecast to rise moderately in 2015-16, from 3.3% in 2014 to 3.5% in 2015 and 3.7% in 2016 revised down by 0.3% for both years compared to the October 2014 estimates. The revision comes despite a 50% decline in global crude oil prices since June, which is expected to bolster some economies, while hurting those dependant on oil revenues.

"New factors supporting growth - lower oil prices, but also depreciation of euro and yen - are more than offset by persistent negative forces, including the lingering legacies of the crisis and lower potential growth in many countries," said Olivier Blanchard, IMF Economic Counsellor and Director of Research.

For 2015, economic growth of US has been revised up to 3.6%, largely due to more robust private domestic demand. Cheaper oil is boosting real incomes and consumer sentiment, and there is continued support from accommodative monetary policy, despite the projected gradual rise in interest rates. Referring to policy imperatives for boosting growth, IMF said monetary policy must stay accommodative to prevent real interest rates from rising, through other means if policy rates cannot be reduced further. In some economies, there is a strong case for increasing infrastructure investment and the global agency called for accelerating economic reforms.

