India to benefit from low oil prices

According to a latest report by the International Monetary Fund (IMF), weak economic growth is still the norm in emerging economies- with the exception of India.

The IMF's World Economic Outlook (WEO) for this year, issued in April, has indicated that India will surpass China in economic growth in 2015, owing to several policy reforms, rising investment and cheaper oil prices.

The report projected India's growth at 7.5 percent in 2015, up from 7.2 percent last year and expects it to level off for at least a year at 7.5 percent in 2016. On the contrary, China's growth is expected to drop from 7.4 percent in 2014 to 6.8 percent this year and 6.3 percent in 2016.

Falling oil prices will play a crucial role in India's growth, the WEO report said. "It not only leaves money in consumers' pockets for spending on other goods or for saving, it also tempers the country's overall inflation rate, which ordinarily tends to rise and even spike during periods of growth", it read.

IMF further added that for emerging economies, structural reforms like clearing hindrances to the development of infrastructure of their power sector, improving labor conditions and streamlining their product markets are important to improve both productivity and their competitive edge. This has already started in India since Narendra Modi took charge as Prime Minister last May, the report pointed out.

"In India, the post-election recovery of confidence and lower oil prices offer an opportunity to pursue such structural reforms," it concluded.