Washington: Bullish on India, the International Monetary Fund has projected a robust growth rate of 7.3 per cent for the country this fiscal, picking up to 7.5 per cent next year.

The multilateral lending agency welcomed recent measures aimed at increasing public infrastructure spending, rationalising subsidies, creating more flexible labour and product markets as well as enhancing financial inclusion.

“India has a very good outlook at the present time. India certainly benefited from low oil and energy prices, one of the world’s largest oil importers and that’s raised the real income of all Indians,” said Paul Cashin, India Mission Chief for the International Monetary Fund.

The agency’s protections are lower than the government’s estimate of 7.6 per cent growth in 2015-16 while Reserve Bank sees economy expanding by 7.4 per cent this fiscal.

Indian government has taken some positive policy actions in terms of inflation targeting, subsidies and land and labor market reforms, Cashin added.

“Growth is projected at 7.3 percent for fiscal year FY2015-16, picking up to 7.5 percent in FY2016-17 (at market prices), supported by stronger domestic demand,” IMF said. As per IMF’s estimates the growth was same at 7.3 per cent in the fiscal 2014-15.

Cashin, however, cautioned that no country can remain immune from internal or external shocks in this volatile times. “Main internal risk to a country like India comes from a weak corporate and bank balance sheet. There has been a big increase in non-performing loans in the present time, due to the previous shortfall in investment. So that is a concern. We think that that is a moderate concern,” Cashin said.

In the report, the IMF said the economy is on a recovery path, helped by a large terms of trade gain (about 2.5 percent of GDP), positive policy actions and reduced external vulnerabilities.

It also highlighted that since late 2014, a collapse of global oil prices has boosted economic activity in India and underpinned a further improvement in the current account and fiscal positions, and engendered a sharp decline in inflation.

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