NEW DELHI: The World Bank has projected that India will grow at 6.7 per cent in the current fiscal and 7.3 per cent in the FY 2018-19, with a cautionary note over lagging private investments and exports, which it feels will be the major challenges going forward.
“Economic activity has begun to stabilise since August 2017. India’s GDP growth is projected to reach 6.7 per cent in 2017-18 and accelerate to 7.3 per cent and 7.5 per cent in 2018-19 and 2019-20, respectively,” the World Bank’s biannual publication, India Development Update: India’s Growth Story, said.
The report accepted that GDP was disrupted due to demonetisation and the Goods and Services Tax (GST).
“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,” it said.
As per the report, services will continue to remain the main driver of economic growth. While industrial activity is expected to accelerate, agriculture will likely grow at its long-term average growth rate.
The report said that despite the recent momentum, attaining a growth rate of 8 per cent and higher on a sustained basis will require “addressing several structural challenges” while maintaining hard-won macroeconomic stability.
“Durable revival in private investments and exports would be crucial for India achieving a sustained high growth of 8 per cent and above,” said Poonam Gupta, Lead Economist and the main author of the report.
The report said that crucial steps in this process include “cleaning up banks’ balance sheets, realising the expected growth and fiscal dividend from the GST, and continuing the integration into the global economy”.
Economic growth slipped to a three-year low of 5.7 per cent in the April-June quarter of the current financial year, though it recovered in the following quarters. The economy is expected to grow at 6.6 per cent in the current financial year, according to the second advance estimates of the Central Statistics Office.