The IMF today projected a robust 7.6 per cent growth rate for India in 2016 and 2017 but asked the government to continue reforming its tax system and eliminate subsidies to provide more resources for investments in infrastructure, education and healthcare.


"Indias GDP will continue to expand at the fastest pace among major economies, with growth forecast at 7.6 per cent in 2016?17," the International Monetary Fund (IMF) said, a slight upward revision of 0.2 from its July projections.


"Indias economy continued to recover strongly, benefiting from a large improvement in terms of trade, effective policy actions, and stronger external buffers, which have helped boost sentiment," the IMF said in its latest report on the World Economic Outlook.


At the same time, the IMF asked New Delhi to continue reform of its tax system and eliminate subsidies to provide more resources for investments in infrastructure, education and health care.


In 2015, Indias GDP grew at 7.6 percent, as compared to Chinas 6.9 percent.


India remains the fastest growing major economies of the world, as IMF has projected 6.6 percent and 6.2 per cent GDP growth rate for China for the year 2016 and 2017 respectively.


Global growth is projected to slow to 3.1 percent in 2016 before recovering to 3.4 percent in 2017.


The forecast, revised down by 0.1 percentage point for 2016 and 2017 relative to April, reflects a more subdued outlook for advanced economies following the June UK referendum in favour of leaving the European Union (Brexit) and weaker-than-expected growth in the United States, the IMF said.


In emerging and developing Asia, growth is projected to remain strong, the report said.


On the other hand, in China, the economy is expected to grow by 6.6 percent in 2016 on the back of policy support, slowing to 6.2 percent in 2017 absent further stimulus.


The IMF said, Indias economy has benefited from the large terms of trade gain triggered by lower commodity prices, and inflation has declined more than expected.


Nevertheless, underlying inflationary pressures arising from bottlenecks in the food storage and distribution sector point to the need for further structural reforms to ensure that consumer price inflation remains within the target band over the medium term, it said.


"Important policy actions toward the implementation of the goods and services tax have been taken, which will be positive for investment and growth," IMF said.


This tax reform and the elimination of poorly targeted subsidies are needed to widen the revenue base and expand the fiscal envelope to support investment in infrastructure, education, and health care, it underscored.