With an "ambitious government undertaking comprehensive reforms", India has "enormous growth potential" compared to other emerging economies, the World Bank said on Wednesday, 10 January, as it projected country's growth rate to 7.3 percent 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 percent in 2017, according to the 2018 Global Economics Prospect released by the World Bank in Washington on Wednesday.
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.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 percent, 0.1 percent more than that of India, while in 2018, its growth rate is projected at 6.4 percent. And in the next two years, the country's growth rate will drop marginally to 6.3 and 6.2 percent, 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 labor market reforms, education and health reforms, as well as relaxing investment bottleneck will help improve India’s prospects.Ayhan Kose
Reducing Youth Unemployment Critical
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 seven percent for the next 10 years.
At the same time, it has its own challenges. This government is very much aware of these challenges and is showing that it’s just doing its best in terms of dealing with them," the World Bank official said.
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)