With sustained recovery in private investment and private consumption, the World Bank in its latest report has forecasted that India’s economic growth will accelerate to 7.3% in the year 2018 from 6.7% in 2017. It added that the gross domestic product (GDP) growth rate will increase further to 7.5% in the following two years - 2019 and 2020. It highlighted that Indian economy has recovered from the effects of demonetisation and the Goods and Services Tax (GST).
The report ‘twice-a-year South Asia Economic Focus (SAEF)’ has stated that the country should strive to accelerate investments and exports to take advantage of the recovery in global growth. It said that every month, the work force increases by 1.3 million people and India must create 8.1 million jobs a year to maintain its employment rate, which has been declining based on employment data analysed from 2005 to 2015, largely due to women leaving the job market.
As per the World Bank, the most substantial medium-term risks are associated with private investment recovery, which continues to face several domestic impediments such as corporate debt overhang, regulatory and policy challenges, along with the risk of an imminent increase in US interest rates. It also said that if the internal bottlenecks are not alleviated, subdued private investment would put downside pressures on India’s potential growth.
