India could outpace China as the world’s fastest growing economy as soon as this year, according to International Monetary Fund director Christine Lagarde.
Lagarde, who was visiting India last week, said the country’s economy is expected to grow 7.5% in the upcoming 2015-2016 fiscal year, which begins in April, up from 7.2% in the current fiscal year.
At that rate, India would be the world’s fastest growing large economy, she added.
Late last year, the IMF had predicted that India’s economy would grow by 6.5% in 2016, faster than China’s predicted 6.3% expansion. Estimates have since been revised for Indian gross domestic product.
However even with the faster pace of growth, India doesn’t come close to China in terms of raw economic power.
China’s economic output totaled more than $10 trillion in 2014, compared with India’s roughly $2 trillion, according to IMF data. Also, predictions don’t necessarily always come true.
Still, Lagarde describe India as a “bright spot” in the outlook for global economic growth.
“The conditions are ripe for India to reap the demographic dividend and become a key engine for global growth,” Lagarde told students at an event organized at a women’s college in New Dehil on March. 16. “It is on the verge of a new chapter, filled with immense promise.”
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Lagarde attributed India’s dynamism to “recent policy reforms and improved business confidence” that provided a “booster shot” for the economy.
The pro-business government of Prime Minister Narendra Modi has made economic growth a top priority.
In its latest budget, the Modi government announced plans to cut taxes on businesses, boost spending on infrastructure, among other broad initiatives.
Looking further ahead, Lagarde said India’s economy will have doubled in size compared with 2009. She said Indian output is also on track to exceed the combined output of Russia, Brazil and Indonesia.
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Lagarde said the India’s robust outlook reflects its growing and young population.
More than half of India’s 1.25 billion population is below the age of 25, with 12 million Indians entering the workforce every year.
By 2030, India is expected to top China as the world’s most populous nation, according to Lagarde.
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CNNMoney (New York) March 23, 2015: 2:05 PM ET