On Tuesday, the International Monetary Fund (IMF) raised India's growth forecast to 7.6% in 2016-17, up from its previous projection of 7.4%.
In April, the IMF forecast a 7.4% growth in the Gross Domestic Product (GDP), citing sluggish recovery in private investment.
In the latest World Economic Outlook (WEO), the IMF said, "India's economy continued to recover strongly, benefiting from a large improvement in the terms of trade, effective policy actions, and stronger external buffers, which have helped boost sentiment."
Indian government expects it to grow close to 8% in 2016-17.
The international organisation also projected India's consumer price inflation to accelerate to 5.5% in 2016-17, up from an average of 4.9% in 2015-16. It added that the current account deficit will widen to 1.4% of GDP in 2016-17, from 1.1% in 2015-16.
The IMF reported unchanged growth projections for both China and the world for 2016 - at 6.6% and 3.1%, respectively.
The multilateral lending agency praised the Reserve Bank of India (RBI) for its constant efforts to strengthen bank balance sheets by full recognition of losses. It further said the Indian economy has gained from lower commodity prices, and as a result inflation went down more than expected, stated The Mint.