World Bank projects 7.3% GDP growth in FY 2018-19

Mar 18, 2018, 01:20
World Bank projects 7.3% GDP growth in FY 2018-19

The World Bank has projected economic growth to accelerate to 7.3% in 2018-19 and 7.5% in 2019-20.

The forecast by the Washington DC-based multilateral agency, which is in line with its earlier projection in January, is however, a tad more optimistic than the government's official estimates, which has pegged GDP growth in 2017-18 at 6.6 per cent.

The Indian economy regained its momentum in the December quarter, recovering from disruptions caused by demonetisation and implementation of the goods and services tax (GST), to expand at 7.2%, the fastest in five quarters.

According to a report on PTI, on being asked about the Dollars 2 billion banking sector fraud which has been unearthed at Punjab National Bank (PNB) recently, World Bank said it is a standalone case and the investment decisions are long term which are taken well in advance.

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The bank's India Development Update divides India's economic growth history into four segments.

"Many are attributing this short term down turn as a negative fallout from the reforms - Demonetization and Goods and Service Tax (GST)".

"India's long-term growth has become more steady, stable, diversified and resilient".

The report has also underlined priority areas for reform by India including accelerating the investment rate, reviving bank credit to support growth and more competitiveness to strengthen exports. It appreciated the impact of GST on formalization of the economy and for making economic growth sustainable. India needs to durably recover its two lagging engines of growth - private investments and exports - while maintaining its hard-won macroeconomic stability.

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"In addition, reforms to land, labour and financial markets are needed to assure the continued competitive supply and use of key production inputs, such as labour, land, finance, and skills", it added.

"Blockchain's application for identity management and know your customer (KYC) looks quite promising", stated the study titled, 'Role of trade finance for inclusive growth, ' jointly conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and global professional services firm Deloitte.

"The implementation of the new Insolvency and Bankruptcy Code is an important step towards changing the credit culture", the report said. Additional measures could include a consolidation of public-sector banks, revising their incentive structure to align more closely with their commercial performance, ensuring a level playing field for private banks, and opening the space for greater competition.

On the flip side, it said oil prices pose less of a risk for the Indian economy, the expected normalisation of monetary policy by the U.S. and the other advanced economies are likely to tighten financing conditions. While oil prices pose less of a risk for the Indian economy, the expected normalization of monetary policy by the United States and other advanced economies are likely to tighten financing conditions.

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World Bank report has lauded India's current record in scheming inflation. India's ranking has already improved form 130 in 2017 to 100 in 2018 on the index.