The World Bank has forecast India's growth accelerating to 8 percent in the next fiscal and said the country is well-placed in a region that has not only logged the highest economic expansion but would benefit the most from cheaper oil bill.
According to the bank's South Asia Economic Focus report, which is released twice a year, the exports sector in the region remains a cause for worry, even as the lower oil import bill should trigger a complete revamp of fuel subsidy regime.
The new projections come soon after host of agencies and organisations expressing renewed confidence on the Indian economy. International credit rating major Moody's revised India's sovereign ratings outlook to positive from stable, while Fitch reaffirmed its stable outlook on India.
The think-tank of rich nations, the Organisation for Economic Cooperation and Development (OECD), also endorsed high growth prospects for India. Similarly, the Asian Development Bank (ADB) has also projected the country's growth at 7.8 percent in 2015-16 and at 8.2 percent in 2016-17.
World Bank South Asia Chief Economist Martin Rama said the biggest oil price dividend to be cashed in by South Asia is one yet to be earned. But it is not one that will automatically transit through government or consumer accounts, he said, commenting on the latest findings of the report.
"Cheap oil gives the opportunity to rationalize energy prices, reducing the fiscal burden from subsidies and contributing to environmental sustainability," he added, even as India's oil import bill for February this year, the latest period for which data is available, shrank by more than 55 percent over the corresponding month of last year.
The World Bank said India's GDP (gross domestic product) growth is expected to accelerate to 7.5 percent in fiscal 2015-16. "It could reach 8 percent in fiscal 2017-18, on the back of significant acceleration of investment growth to 12 percent during (FY2016-FY2018)," the economic focus report said.
"The country is attempting to shift from consumption - to investment-led growth, at a time when China is undergoing the opposite transition."
Since the fall in crude oil prices from mid-2014, the finance ministry has estimated that the subsidy burden on account of oil for the year 2014-15 will be around Rs.80,000 crore.
With the steep fall in oil prices the subsidy burden has been projected to come down from a high of Rs.1.39 lakh crore for 2013-14 to around Rs.80,000 crore in 2014-15.
The steep fall in the oil prices has also allowed the three-state owned petroleum products retailers to pass on the benefit of cheaper prices to consumers. The retailers have been allowed by the government to fix the prices of petrol and diesel prices as per international prices.
The three oil marketing companies (OMCs) have been revising rates on the 1st and 16th of every month based on the fortnightly average of international oil prices and the rupee-dollar exchange rate.
The country's oil imports during April-February, 2014-15, totalled $130.84 billion, down 12.24 percent from the corresponding period of the previous fiscal.