World Bank on Thursday said that the Indian economy is likely to grow by 5.5 per cent this fiscal, which can increase to 7-8 per cent in the coming years, provided the reforms are speeded up.

"The official estimates of GDP growth is 5.5 per cent during 2003-04. The World Bank agrees with this number," the bank's managing director, Peter Woicke, told reporters in a press conference in New Delhi.

The country's economy is estimated to have grown by 4.4 per cent in the last fiscal, mainly due to a negative growth of 3.1 per cent in agriculture.

Woicke said Indian economy has the potential to grow faster at 7-8 per cent in the coming years. "It will generate more employment and reduce poverty," he added.

He said SARS (Severe Acute Respiratory Syndrome) would not affect India's economic growth potential to a large extent.

"Reforms are still slow. Regulations are still twisted. We have to work with the government to make regulations easier," Woicke, who is also executive vice president of International Finance Corporation, said.

He said there has been a perceptible change in sentiments and the Indian industry is becoming more competitive. "Lot of Indian companies are looking outside," he added.

He, however, stressed on public-private partnerships in certain infrastructure sectors like public transport, as it would be difficult for private sector to manage it alone.

To help govt on divestment

Woicke also offered to help the government to speed up its divestment process by suggesting social security schemes and retraining programmes for staff of sell-off bound public sector undertakings.

Woicke, who discussed the issue with Divestment Minister Arun Shourie, said the apprehension that privatisation leads to lay-offs was not always correct.

"World Bank and IFC (International Finance Corporation) can help the government in putting in place a social security net and retraining laid-off staff," he said after signing an agreement with the Confederation of Indian Industry in New Delhi.'

While terming India's democratic set up as a 'blessing', Woicke said many important economic policies are delayed as "politicians look at next elections".