Indian economy to grow at a higher pace of 6% in FY14: ADB

Multilateral funding agency ADB on Tuesday said India's growth rate will improve to 6 per cent in the current fiscal on the back of stronger external demand and progress on reforms.

Reforms are needed in India to facilitate the turnaround from growth deceleration due to structural bottlenecks, deteriorating investment and a worsening current account deficit, said 'Asian Development Outlook 2013' report.

The Manila-based funding agency said, however, the forecasts are subject to risks like another bad monsoon, slow headway on fiscal consolidation and reforms, and continued sluggishness in the global economy.

During 2012-13, India is expected to grow at 5 per cent, the slowest in the decade exacerbated by a slump in services, weak consumption,

contracting exports and also reduced agricultural growth due to the late onset of the monsoon.

However, the growth will pick up to 6.5 per cent in 2014-15 on the back of expected improvement in global outlook and increase in exports, the report of Asian Development Bank (ADB) said.

"Supply and policy obstacles have seen growth decelerate and investment and industrial output slump, with the statistics compounded by weak global demand," said ADB Deputy Country Director Narhari Rao.

"Policymakers need to remove structural hurdles to faster growth, and while there have been some encouraging recent reforms, more is needed," he said.

The report said the next two years should see some improvement, with a normal monsoon likely to lift agriculture, and exports, industry and services expected to expand on stronger domestic and external demand.