NEW DELHI: India’s economy is recovering strongly, the International Monetary Fund ( IMF ) has said in its latest assessment of global growth, bumping up the country’s growth forecast for the current and next year as it warned of subdued global growth that could fuel protectionism.In its update of the World Economic Outlook (WEO), the IMF has forecast India will grow 7.6% this fiscal and next, up from 7.4% estimated in July for both the years. “India’s economy continued to recover strongly, benefiting from a large improvement in the terms of trade, effective policy actions, and stronger external buffers, which have helped boost sentiment,” the IMF said in its report.With this uptick in forecast, India has pulled further ahead of China , which is projected to grow 6.6% and 6.2% respectively in 2016 and 2017, unchanged from the July estimate. “India’s gross domestic product is projected to expand 7.6% this year and next, the fastest pace among the world’s major economies,” the IMF said while urging the country to reform its tax system and eliminate subsidies to provide more resources for investments in infrastructure, education and health care.The IMF said India has benefited from lower commodity prices, and inflation has declined more than expected, but wants structural reforms to address underlying inflationary pressures due to bottlenecks in food storage and distribution to keep inflation in the target range.In a new monetary policy framework, India has set an inflation target of 4% till March 2021, within a tolerance band of two percentage points (2-6%). The report said the Goods and Services Tax ( GST ) will be positive for investment and acknowledged several positive measures undertaken over the past two years.It called for additional measures to enhance efficiency in the mining sector and increase electricity generation to boost productive capacity, besides labour market reforms to reduce rigidities to maximise the employment potential of the demographic dividend. It said measures to strengthen bank balance sheets through full recognition of losses and increasing bank capital should continue.Global growth will remain subdued following a slowdown in the US and the UK’s exit from the EU, recovering only marginally to 3.4% in 2017 from 3.1% in the current year. Advanced economies will expand 1.6% in 2016, less than 2.1% last year and down from the July forecast of 1.8%. The US is now forecast to grow 1.6%, down from 2.2% estimated in July.The IMF said the “precarious nature of the recovery” even eight years after the global financial crisis has raised the “spectre of persistent stagnation, particularly in advanced economies”, warning it could further fuel populist calls for restrictions on trade and immigration.“It is important to defend the prospects for increasing trade integration,” IMF chief economist Maurice Obstfeld said in a statement. “Turning back the clock on trade can only deepen and prolong the world economy’s current doldrums.” He said it would hamper productivity and innovation. The IMF called for central banks in advanced economies to maintain easy monetary policies while saying that may not even suffice because of slowing productivity growth and ageing populations.“Governments should spend more on education, tech and infrastructure to expand productive capacity while taking steps to alleviate inequality,” it said. “Many countries also need to counteract waning potential growth through structural reforms to boost labour force participation, better match skills to jobs, and reduce barriers to market entry.”