India's GDP growth to remain strong at 7.6% in 2016: World Bank

The World Bank in its latest report on ‘South Asia Economic Focus’ has said that in India, Gross Domestic Product (GDP) growth will remain strong at 7.6 per cent in 2016 and 7.7 per cent in 2017, supported by expectations of a rebound in agriculture, civil service pay reforms supporting consumption, increasingly positive contributions from exports and a recovery of private investment in the medium term.

Further, it said that India’s economic growth remained robust, which, as in the past, is expected to support continued poverty reduction. This year is expected to see some convergence in rural and urban economies, supported by stimulating policies, such as passage of Goods and Services Tax (GST) and civil pay revisions, along with good monsoons.

However, the biannual report said that India faces the challenge of further accelerating the responsiveness of poverty reduction to growth, enforcing inclusion of presently excluded groups (such as women and scheduled tribes), and extending gains to a broader range of human development outcomes related to health, nutrition, education and gender, where the country continues to rank poorly. Further, private investment also faces several domestic impediments in the form of corporate debt overhang, stress in the financial sector, and regulatory and policy challenges. It said that if these bottlenecks are not alleviated, subdued private investment would create downside pressures on India’s potential growth.

The report also said that South Asia remains a global growth hotspot and has proven resilient to external headwinds such as China’s slowdown, uncertainty around stimulus policy in advanced economies, and slowing remittances. Though, the report after a reality check on the state of private investment in South Asia, pointed that the region has fallen short of expectations. Mobilizing domestic savings remains key at the aggregate level.