The World Bank in its India Economic Update has predicted India's economy to grow at 6.7% in the current financial year, which is set to accelerate to 7.3% in 2018-19 and 7.5% in 2019-20.
The Central Statistics Office predicted GDP growth to be 6.6% in the current financial year.
“The key takeaways about the Indian economy are that it is steadily growing, and it is growth where volatility has significantly decreased,” Junaid Ahmed, World Bank Country Director of India said at a press conference. “Another factor is that growth is not being led any single factor, and is instead being driven by a number of factors such as exports, consumption, and investment.”
“Yet another highlight is the resilience of India’s growth,” Mr Ahmed said. “Despite shocks such as the implementation of the Goods and Services Tax, and demonetisation, the growth path is back on trend.”
'Growth steadily accelerating'
“It would be hard to find another country with such a growth promise,” Poonam Gupta, Lead Economist with the World Bank and main author of the report said while presenting the report said. “Growth is not just steady, but is steadily accelerating.”
The report divides India’s economic growth history since 1970 into four segments. The first is from 1970 to 1990, when the economy maintained an average growth rate of 4.4%. This subsequently accelerated in the 1991-2003 period to an average of 5.4%. Thereafter, growth accelerated sharply for a short period from 2004 to 2008, where it averaged 8.8%, which then slowed down to a “still impressive” average of 7.1% in the 2009-17 period.
“If we were to ask what it could take to reach a sustainable 8% growth trajectory, then our only example would be to look at the 2004-08 period,” Ms Gupta said. “Durable revival in private investments and exports would be crucial for India achieving a sustained high growth of 8% and above.”
“This will require continued impetus for structural reforms,” Ms Gupta added. “Resorting to countercyclical policies will not help spur sustained growth and India should not compromise its hard-earned fiscal discipline in order to accelerate growth.”
The report did highlight several challenges facing the Indian economy that needed prioritised attention. These included the poor state of private sector investments which needed to be enhanced through measures “that assure a favourable investment climate while reducing policy uncertainty”.