Expressing optimism over India’s medium-term economic prospects, global ratings agency, Fitch Ratings in its latest report has stated that the country has the potential to grow at an average of 6.7 percent per annum over the next five years and will be the fastest growing large economies. It added that even though this rate of growth is lower than the potential and what policymakers have been aspiring for, it is ahead of the 5.5 percent growth estimated for China and Indonesia, who are joined at the second fastest rank.
The report titled ‘Global Economic Outlook (GEO) forecast’ has said that demographic factors, where India is among the youngest countries in the world with a maximum number of people in the working age group, and investment rates will be aiding the country. It also said that the country is set to witness a continued robust growth in the working-age population in the next five years, bolstering growth potential, and added that Indonesia, Mexico, Turkey and Brazil will also benefit from a similar trend.
Fitch Ratings said India has an ‘impressive rate of capital accumulation per worker’ which helps in maintaining the economic growth and also in upping the living standards. However, it said going by total factor productivity, which captures improvements in the efficiency of the production process, India has some catching-up to do. It added that trend total factor productivity in India is expected to increase after recent ambitious structural reforms such as the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code.
