In a reality check for the government as it presents its maiden Budget next month, the World Bank on Friday marginally cut India’s GDP forecast for FY 15 to 5.5 per cent and also downgraded its global forecast for 2014. Warning emerging economies to get their house in order through structural reforms, the World Bank said that the big acceleration in global growth will come from high income countries.
India is projected to grow at 5.5 per cent in FY 15 and 6.3 per cent in FY 16 while the global economy is estimated to expand at 2.8 per cent this fiscal and strengthening to 3.4 per cent next fiscal.
India must work on structural reforms and remove immediate bottlenecks to growth – improve the business environment through regulatory and compliance costs, revitalise the power sector, introduce GST, urban infrastructure development, says World Bank. (Image Credit: Thinkstock)
Fiscal consolidation is essential for India given the high inflation rate. With the Iraq crisis making oil prices unpredictable, India should make its subsidy system more efficient to curb deficit and increase spend on capital expenditure. (Image Credit: Thinkstock)
Stressed bank loans at over 10 per cent of all loans represent a big vulnerability. If left unaddressed, it could result in insufficient financing for resumption of the investment cycle in India. (Image Credit: Thinkstock)
Fixed investment growth in India slowed markedly since 2012