Lauding the reforms initiated by the government, the World Bank opined that India has “enormous growth potential” compared to other emerging economies. The global body also projected India’s growth rate to 7.3 per cent in 2018 and 7.5 for the next two years.
India, despite initial setbacks from demonetisation and Goods and Services Tax (GST), is estimated to have grown at 6.7 per cent in 2017, according to the 2018 Global Economics Prospect released by the World Bank.
“In all likelihood India is going to register higher growth rate than other major emerging market economies in the next decade. So, I wouldn’t focus on the short-term numbers. I would look at the big picture for India and big picture is telling us that it has enormous potential,” said Ayhan Kose, Director, Development Prospects Group, World Bank.
He said in comparison with China, which is slowing, the World Bank is expecting India to gradually accelerate.
“The growth numbers of the past three years were very healthy,” Kose, author of the report, said.
In 2017, China grew at 6.8 per cent, 0.1 per cent more than that of India, while in 2018, its growth rate is projected at 6.4 per cent. And in the next two years, the country’s growth rate will drop marginally to 6.3 and 6.2 per cent, respectively.
To materialise its potential, India, Kose said, needs to take steps to boost investment prospects. There are measures underway to do in terms of non-performing loans and productivity, he said.
“On the productivity side, India has enormous potential with respect to secondary education completion rate. All in all, improved labour market reforms, education and health reforms as well as relaxing investment bottleneck will help improve India’s prospects,” Kose said.
Noting that India has a favourable demographic profile, he said it is rarely seen in other economies.
“In that context, improving female labour force participation rate is going to be important. Female labour force participation still remains low relative to other emerging market economies. Bringing force right now idle outside of the productive activities will make a huge difference,” he said.
Reducing youth unemployment is critical, and pushing for private investment, where problems are already well-known like bank assets quality issues…If these are done, India can reach its potential easily and exceed, Kose asserted.
India’s growth potential, he said, would be around 7 per cent for the next 10 years.
The Indian government is “very serious” with GST being a major turning point and banking recapitalisation programme is really important, Kose said.
“India is a very large economy. It has a huge potential. At the same time, it has its own challenges. This government is very much aware of these challenges and is showing just doing its best in terms of dealing with them,” the World Bank official said.
(With inputs from PTI)