AFP/ New Delhi

India's economy is set to grow faster than every other major emerging market this year, the International Monetary Fund forecast Tuesday, making it a standout performer at a time of stuttering global growth.

While the Fund lowered its forecast for expansion in 2015, it predicted an acceleration next year thanks to a pickup in investment, policy reforms and lower commodity prices, which have dealt a windfall to Prime Minister Narendra Modi's government.

"Growth in India is expected to rise above the rates in other emerging market economies," the report said. 

"Inflation is expected to decline further in 2015 reflecting the fall in global oil and agricultural commodities prices."

In its semi-annual World Economic Outlook the Fund said the economy would grow 7.3 percent this year, down from a July estimate of 7.5 percent. But it forecast 7.5 percent expansion next year.

However, it predicted China's economy would see growth slow to 6.8 percent this year and 6.3 percent in 2016 -- both the lowest since 1990. The slowdown in China from years of double-digit growth has sent shockwaves around the world as it is the world's key driver of economic growth.

But the IMF said a strong India along with recovery in some other developing economies would help to offset the slackening in China.

Domestic demand in India is projected to remain strong, while a decrease in the country's current account deficit -- meaning the value of imports is higher than the value of exports -- has burnished national finances, the report said.

In a speech in the southern city of Bangalore Tuesday, Modi outlined business reforms aimed at attracting foreign investment including simplifying regulations, lifting the cap on investment in some sectors and offering fast-track approvals for infrastructure projects.

"I've always said that government has no business to do business," he said to applause. "Hence, we are encouraging private investments in areas where earlier only government used to invest."

"We want to make sure our tax regime is transparent and predictable," he added.

Byzantine investment regulations and a complicated and unpredictable tax regime are frequently named as factors deterring companies from investing in India.