London: India is poised to grow 7.7% this year and 8% in 2016 to become the ‘fastest growing major economy’, according to think-tank Organisation for Economic Cooperation and Development (OECD).

In its interim economic assessment report released today, OECD said that over the next two years India is set to grow faster than China, where growth is slowing towards the official target of around 7%.

However, the grouping cautioned that maintaining rapid growth would be a challenge for India despite the strong current momentum.

OECD’s bullish outlook for India comes close on the heels of IMF chief Christine Lagarde describing the country as a ‘bright spot’ on cloudy global horizon.

In November last, the grouping had projected Indian economy to expand 6.4% in 2015 and 6.6 % in 2016.

OECD said that part of this relative improvement reflects significant revisions to past GDP data, which raise the base growth rate through 2014.

According to OECD, low oil prices and monetary easing are boosting growth in the world’s major economies, but the near-term pace of expansion remains modest, with abnormally low inflation and interest rates pointing to risks of financial instability.

“The widespread easing of monetary policy over the past few months, affecting countries accounting for roughly half of global GDP, has resulted in improvements in global financial conditions. A number of the associated moves in exchange rates have been large, raising the question of overshooting in some cases,” it said.

Strong domestic demand is driving growth in the US, which, combined with dollar appreciation, is adding to demand in the rest of the world, OECD said.