India’s economic growth story since the 1990s has been steady, stable, diversified, and resilient and reflect strong macroeconomic fundamentals despite fluctuations in recent quarters due to disruptions caused by two major structural reforms — demonetisation and the GST.
The World Bank projected a growth rate of 7.3% in the year 2018-2019 and 7.5% 2019-2020. The World Bank in its biannual publication, India Development Update: India’s Growth Story said that India’s average economic growth in the past 50 years provides a long-term perspective that it has accelerated slowly but steadily across all sectors – agriculture, industry and services and become more stable.
According to the findings in the report, India’s average economic growth between 1970 and 1980 has been 4.4%, which rose by 1 percentage point to 5.4% between the 1990 and 2000. The major structural changes of opening India’s economy led to an impressive average growth of 8.8% between 2000 and 2010. Between 2010 to date, India’s economic growth has averaged at 7.1% mostly due to the global slowdown post the financial crisis of 2008.
“India’s long-term growth has become more steady, stable, diversified and resilient. In the long-run, for higher growth to be sustainable and inclusive, India needs to use land and water, which are increasingly becoming scarce resources, more productively, make growth more inclusive, and strengthen its public sector to meet the challenges of a fast-growing, globalizing and increasingly middle-class economy,” said Junaid Ahmad, World Bank Country Director in India.
The long-term analysis of India’s economic growth shows that the slowdown in the economy is a “perceived notion”, said World Bank economist Poonam Gupta.
India’s GDP growth saw a temporary dip in the last two quarters of 2016-17 and the first quarter of 2017-18 due to demonetisation and disruptions surrounding the initial implementation of GST. Economic activity has begun to stabilize since August 2017.
The World Bank said that India’s growth in recent years has been supported by prudent macroeconomic policy: a new inflation targeting framework, energy subsidy reforms, fiscal consolidation, higher quality of public expenditure and a stable balance of payment situation.