Projecting India's growth at 5.4 percent this fiscal and 6.6 percent the year after, the Organisation for Economic Cooperation and Development (OECD) Wednesday said only structural reforms can raise it to 8 percent and beyond.
"Our forecast for 2015 and 2016 is that India's GDP growth will be under 8 percent. The question is how do we get it to 8 percent-plus?" OECD's chief economist Catherine Mann said, releasing the Paris-based organisation's India Economic Survey here.
"Structural reforms will raise India's economic growth. In their absence, growth will remain below the 8 percent level achieved during the previous decade," Mann said while listing infrastructure, business environment, labour laws and skill as bottlenecks.
The growth projection for next fiscal is higher than 5.7 percent predicted earlier.
On the inflation front, the organisation has projected the annual rise at 7.1 percent for this fiscal and 6.3 percent and 6 percent for the subsequent two years as measured by the consumer price index.
In the short term, lower inflation and smaller deficits are much required, it said.
"Structural improvements to the business climate are crucial for medium-term growth and in the longer term, health improvement and increased female participation in the labour market will sustain strong and inclusive growth."
The OECD, which is composed of advanced economies, said India should formally adopt a price-control strategy that will help contain inflationary expectations and provide the much-needed support for savings and investment.
This it said in terms of India's policy of inclusive growth and poverty reduction.
"Although absolute poverty has declined, it remains high and income inequality has risen since the early 1990s. Inefficient subsidy on food, energy and fertilisers have increased steadily while public spending on healthcare and education has remained low."
It also suggested implementing indirect tax reforms through the goods and services tax regime, as also a cut energy subsidies, as part of the wider effort to prune the fiscal deficit.
Exports are constrained by supply-side bottlenecks, while high corporate borrowing and deteriorating asset quality at banks may put the investment recovery at risk, said the report.
