Activate stalled engines to sustain 7.6% growth: WB

Activate stalled engines to sustain 7.6% growth: WB

India needs to activate all the stalled engines to sustain 7.6% growth in coming years

The Dollar Business Bureau

The World Bank has said that India needs to activate all the “stalled engines” including rural demand and private investment to sustain the growth of 7.6 percent in the upcoming years.

The bank has said that the country’s economy has expanded at a much faster pace in the 2015-16 even though there are number of growth machines that were stalled.

India Development Update, a twice yearly report released said, "Agriculture having faced two consecutive drought years- rural household consumption, private investments and exports have not performed to potential."

The main challenge for the Indian economy is to activate the stalled engines in agricultural growth, trade and private investment and rural demand. There is also need to ensure that the demand from public investment and urban household do not run out of the fuel.

The economic growth is expected to be at 7.6 percent in 2016-17 followed by an acceleration to 7.7 percent in 2017- 18 and 7.8 percent in 2018-19.

Onno Ruhl, World Bank's country director in India said, “"There are good reasons for confidence in India's near-term prospects. However, a pickup 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.”

According to the update, the most significant near and the medium-term risk stem from the banking sector and also the ability to finance the private investments.

It is further noted that due to greater delegation by the center for spending power, the states are responsible for 57 percent of the expenditure, which accounts for 16 percent of the GDP.

The statement further said, “Combined health and education expenditures increased in 13 of the 14 states for which data was available.”

The Dollar Business Bureau - Jun 21, 2016 12:00 IST