World Bank today said India can grow at 6.4 per cent in 2015 and accelerate further next year...
World Bank today said India can grow at 6.4 per cent in 2015 and accelerate further next year, but cautioned that an enduring “bias” on the basis of caste and other factors can impede prosperity.
The government, however, is well aware of this issue and the World Bank sees India as “a bright spot in an otherwise mediocre global economic outlook,” the multilateral lending agency’s President Jim Yong Kim said here.
“Indian society has an enduring exclusion that is based, among other things, on caste identities. This bias can impede shared prosperity, serving as a basis for discrimination in many spheres, including in employment and other markets, as well as in public services,” he said.
Acknowledging the government’s efforts to address such issues, Jim said that Prime Minister Narendra Modi has focused on programmes to promote “broad-sharing of its benefits”, in addition to action that will accelerate growth.
“Its (government’s) special allocation of a fund for entrepreneurs from among the Scheduled Castes, and its focus on fixing bottlenecks so that money earmarked for the Scheduled Tribes reaches them, are both ethically just and economically sound responses,” he added.
Speaking at the Vibrant Gujarat summit, inaugurated today by Modi, the World Bank chief said that there is much reason for optimism among investors, entrepreneurs and CEOs thinking of doing business in Gujarat and the country as a whole.
“According to our projections, its (India’s) economy is expected to grow 6.4 per cent this year and even faster in 2016, he said.
He said Prime Minister Narendra Modi and his government are quickly putting in place the building blocks for even more rapid growth, streamlining the national regulatory structure, using public funds more efficiently, and promoting social inclusion.
After slowing to sub-five per cent growth in the previous two financial years, the economy has started showing signs of pick-up as it expanded by 5.7 per cent and 5.3 per cent in the second and third quarter of 2015.
The World Bank chief further said the Modi government has eliminated diesel subsidies that, for years, have been a drag on India’s growth and harmed the environment.
“If made permanent, this decision will improve the country’s fiscal position, reducing the cost of borrowing and public investments,” Jim said.
He said India has enjoyed years of strong economic growth and appears to have weathered the worst of the global financial crisis.
The World Bank has a “deep interest” in promoting policies and supporting projects that maximise sustainable and inclusive economic growth, Jim said.
He also said India is on the cusp of major progress in reducing the number of people who live in extreme poverty.
Jim also said he was “very encouraged” by the recent proposal of a Constitution amendment bill for Goods and Services Tax. It offers an opportunity to make it substantially easier to do business in India, he said.
“It has a visionary leader who is focused on economic strategies that we believe will put the country on a path to faster, more inclusive growth,” Jim said, and added the country, is therefore on the cusp of major progress in reducing the number of people who live in extreme poverty.
“If these initiatives are fully implemented, Prime Minister Modi and his government will promote inclusive and sustainable growth, allowing businesses and entrepreneurs to profit, create jobs, and help the most vulnerable,” he said.
He further said that to end extreme poverty in the world in the next 15 years, “we must reduce the number of people living on less than USD 1.25 a day to below 3 per cent of the population”.