By Elton Gomes
The World Bank has predicted India will regain its position as the fastest growing major economy in the world with a growth rate of 7.3% for this fiscal year. The agency added that “as factors holding back growth in India fade,” the country could see growth up to 7.5% in the next two fiscals.
The bank released its Global Economics Prospects report on Tuesday, and stated that India’s growth reflects “robust private consumption and strengthening investment.”
The report further mentioned that “India’s GDP growth bottomed out in the middle of 2017 after slowing for five consecutive quarters, and has since improved significantly, with momentum carrying over into 2018 on the back of a recovery in investment.”
India has finally recovered from the economic shocks of the implementation of the Goods and Services Tax (GST) in the middle of 2017. This combined with an increase and stable manufacturing output and industrial production have helped the economy. As per the report, poverty rates could be brought down in the future as per capita growth rates “are strong.”
The report further predicted that growth rates in China are expected to slow down from 6.9% in 2017 to 6.5% in 2018. In 2019, China is expected to grow at 6.3% in 2019 and 6.2% in 2020. Whereas India’s growth potential continues to remain at 7%.
Ayhan Kose, Director of the Development Prospects Group at the World Bank, told PTI, “India is doing well. Growth is being robust. Investment growth remains high. Consumption remains strong. All in all these numbers are encouraging.”
Kose added that the World Bank is optimistic about India sustaining its high growth rate, “The big issue is now that India has a potential to sustain this growth and we are optimistic about India to realise that potential.”
Sustaining growth
In January 2018, the World Bank said that India needs to take steps to boost its investment prospects. Kose said India has taken measures concerning non-performing loans and productivity. “On the productivity side, India has enormous potential with respect to secondary education completion rate. All in all, improved labor market reforms, education and health reforms as well as relaxing investment bottleneck will help improve India’s prospects,” Kose told PTI.
Kose then spoke about the willingness of the Indian government to identify and rectify potential bottlenecks, “The Indian government has already recognised some of these problems and (is) undertaking measures and willing to see the outcomes of these measures.”
Kose remained highly confident about India’s growth potential and claimed that for the next 10 years, India will continue to see a sustained growth rate of 7%.
Elton Gomes is a staff writer at Qrius.
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