The World Bank has predicted that the Indian economy will accelerate in the current fiscal year with the new government expected to take strong measures to revive growth and kick-start long stalled economic and structural reforms.

The global lender expects Asia's third biggest economy to expand by 5.5 per cent in FY 2014-15, rebounding to above 5 per cent growth for the first time in three fiscals.

India's economy grew by 4.7 per cent in FY 2013-14, the second straight fiscal of below 5 per cent expansion.

In FY 2015-16, India's economic growth is tipped to accelerate to 6.3 per cent and to 6.6 per cent in FY 2016-17.

Big-bang reforms including introduction of GST and DTC, elimination of bottlenecks, liberalization of FDI norms, and reduction of costs of doing business may bolster foreign investment and business spending, lifting economic growth.

The biggest challenge for the new government will be to achieve fiscal consolidation. This can be achieved by the implementation of GST, cutting down on fuel, food and fertilizer subsidies, and broadening the tax base.

"Removing bottlenecks in energy supply, improving the business climate, and unlocking stalled PPP contracts are some of the key areas that could be addressed in the short term to bring India back to a high growth trajectory", the World Bank said.

Dion Global Solutions