1. Here’s what will restart India’s stalled engines of growth

Here’s what will restart India’s stalled engines of growth

To sustain the 7.6% growth rate in FY17, India will need to restart dormant growth drivers such as private investment and rural demand, while ensuring the working engines do not run out of fuel, World Bank said in a report on Monday.

By: | New Delhi | Published: June 21, 2016 6:30 AM

 

indian economy

According to the Update, the most significant near-and medium-term risks stem from the banking sector and its ability to finance private investment which continues to face several impediments in the form of excess global capacity, regulatory and policy challenges, in addition to corporate debt overhang. (Reuters)

To sustain the 7.6% growth rate in FY17, India will need to restart dormant growth drivers such as private investment and rural demand, while ensuring the working engines do not run out of fuel, World Bank said in a report on Monday.

“The dissipation of the large boost from historically low oil prices in the past year will make this a challenging task, but prospects of a normal monsoon, which can reactivate agriculture and the rural economy, may help,” said its India Development Update. A stabilisation of global trade that lifts exports would provide further support, it added.

India’s economy expanded at 7.6% in FY16 from an average of 6.5% during FY13-FY15, even as several growth engines stalled: agriculture faced a second consecutive drought year, rural households were under stress, private investments flat-lined, and exports plummeted. The working engines — demand from urban households and public investments — propelled the economy to a higher growth path.

The Update projected India’s economic growth to be at 7.6% in FY17, marginally lower than the Bank’s April forecast of 7.7%. The GDP growth will see modest acceleration to 7.7% in FY18 and 7.8% in FY19, it said.

“However, a pick-up in investments is crucial to sustain economic growth in the longer term. The recently approved bankruptcy code is helpful in this regard, and once it is implemented it will help unleash the productivity that Indian firms need in order to create jobs, and become globally competitive,” World Bank’s India head Onno Ruhl said.

While manufacturing, services, urban consumption keep economy on growth path, the Update highlighted the need to strengthen governance and balance sheets of banks.

According to the Update, the most significant near-and medium-term risks stem from the banking sector and its ability to finance private investment which continues to face several impediments in the form of excess global capacity, regulatory and policy challenges, in addition to corporate debt overhang.

Calculate your income tax post budget 2018 through this Income Tax Calculator, get latest news on Budget 2018 and Auto Expo 2018. Like us on Facebook and follow us on Twitter.

  1. No Comments.

Go to Top