World bank is upbeat on India’s growth prospects as its latest report projects it growing at 6.7 percent in 2017 and by 7.3 percent in 2018-19 respectively. The bright outlook by the international financial body comes despite initial setbacks from demonetisation and Goods and Services Tax (GST). According to the 2018 Global Economics Prospect released by the World Bank on Tuesday. India’s GDP growth will pick up to 7.3 percent in 2018-19 and to 7.5 percent for the next two years. India leapfrogged 30 places in the recently-published Ease of Doing Business index brought out by the World Bank. One key factor commentators have missed while remarking on this is India emerging as an investment hotspot, leading to a spike in mergers and acquisitions (M&As). Here are the three key reasons why World Bank is so optimistic on India :-
1) Stable economy: There is a host of positives that are playing out in India’s favour, including macroeconomic outlook and a fast-changing regulatory ecosystem—and both are central to the current M&A outlook. The Indian economy has stayed resilient over the past several quarters, mainly because of a stable fisc, easing credit conditions with manageable inflation and continued progress in reforms.
2)Measures against NPA: The Indian government has already recognised some of these problems and undertaking measures and willing to see the outcomes of these measures. India is taking measures in terms of non- performing loans and productivity.
3) Labour market reforms: India has enormous potential with respect to secondary education completion rate. All in all, improved labour market reforms, education and health reforms as well as relaxing investment bottleneck will help improve India’s prospects.
“In all likelihood, India is going to register higher growth rate than other major emerging market economies in the next decade. So, I wouldn’t focus on the short-term numbers. I would look at the big picture for India and the big picture is telling us that it has enormous potential,” Ayhan Kose, Director, Development Prospects Group, World Bank, told PTI in an interview.He said in comparison with China, which is slowing, the World Bank is expecting India to gradually accelerate.
“The growth numbers of the past three years were very healthy,” Kose, author of the report, said. And in the next two years, the country’s growth rate will drop marginally to 6.3 and 6.2 percent, respectively.
To materialise its potential, India, Kose said, needs to take steps to boost investment prospects.There are measures underway to do in terms of non- performing loans and productivity, he said.”On the productivity side, India has enormous potential with respect to secondary education completion rate. All in all, improved labour market reforms, education and health reforms as well as relaxing investment bottleneck will help improve India’s prospects,” Kose said.