India to grow at 7.4 per cent in FY18: ADB

New Delhi: India is expected to grow at an accelerated pace of 7.4 per cent in 2017-18, which will continue to be the fastest-growing major economy in the world, ahead of China, the Asian Development Bank (ADB) said today.

On the back of reforms initiatives being taken by the government, India's growth rate will improve further to 7.6 per cent in 2018-19, ADB's flagship publication Asia Development Outlook (ADO) said.

"An array of important economic reforms have propelled India's economic success in recent years," Yasuyuki Sawada, ADB's Chief Economist, said in a statement.

"A continued commitment to reforms, especially in the banking sector, will help India maintain its status as the world's fastest growing major economy," Sawada said. India, however, may witness firming up of inflation on an expected spike in crude oil prices in global market, it said.

"The impact of the demonetisation of high-value banknotes is dissipating as the replacement banknotes enter circulation. Stronger consumption and fiscal reforms are also expected to improve business confidence and investment prospects in the country," said the report.

India recorded a growth rate of 7.1 per cent in 2016-17, despite fears that demonetisation of high-value currency notes of Rs 500 and Rs 1,000 in November last year would choke economic growth.

"In India, the sub-region's largest economy, growth is expected to pick up to 7.4 per cent in fiscal year (2017-18) and 7.6 per cent in 2018-19, following the 7.1 per cent registered last fiscal," the report said.

China, on the other hand, the report said will witness slowdown, with growth projected to slip to 6.5 per cent in 2017 and 6.2 per cent in 2018, down from 6.7 per cent in 2016.

India, which overtook China in terms of growth in 2015-16, is on course to remain the fastest growing major economy in the world.

"For the third consecutive year, India's growth rate was over 7 per cent. This growth was aided by robust performance of manufacturing and agricultural sector helped by good monsoon. Going forward, it continues to be one of the fastest growing major