UNITED NATIONS: India's economy is projected to grow at 7.1 per cent in the fiscal year 2020 on the back of strong domestic consumption and investment but the GDP growth is a downward revision from the 7.4 per cent estimated in January this year, according to a report by the United Nations.
The World Economic Situation and Prospects (WESP) 2019 Mid-year Update, released here Tuesday, said that the Indian economy, which generates two-thirds of the regional output in South Asia, expanded by 7.2 per cent in 2018.
"Strong domestic consumption and investment will continue to support growth, which is projected at 7.0 per cent in 2019 and 7.1 per cent in 2020," the report said.
Dawn Holland, the Chief of the Global Economic Monitoring Branch at the UN Department of Economic and Social Affairs (DESA), said India should focus on increasing private sector involvement in investment.
"The one area I think India should be focusing on is increasing the private sector involvement in investment and facilitating access to finance for the private sector and small and medium-sized firms in particular, which is a barrier to faster growth in India," she said in response to a question by PTI on factors needed to bolster India's economic growth going forward.
On any lingering impacts of demonetisation on India's growth, which has been revised downward, Holland said, "we see the demonetization had a significant impact when it was initially introduced but that seems to have passed through relatively quickly. I would not say there is a very large hangover from that" in the current economic scenario.
Holland, addressing a press conference in the UN Headquarters on the release of the WESP mid-year update, said that while the forecast for India has been downgraded, "I would also point out that the forecast for India is among the highest in all of the countries, particularly the large economies."
With India projected to grow at 7 per cent in 2019 and 7.1 per cent in 2020, Holland said compared to the global growth of 2.7 per cent, India's economic growth "obviously stands out" as among the very high rates of growth in the world.
On the reasons behind the downward revision in India's GDP growth, she said, "consumption and investment are continuing to support the economy so it is probably some effects - even though India is not as deeply integrated into the impacted global supply chains - it is integrated into the world economy and so any dramatic slowdown in world trade, like we have seen, will necessarily have had at least some impact on the (Indian) economy."
The WESP mid-year update noted that growth projections for 2019 have been revised downward in all major developed economies. The growth outlook for many developing economies has also weakened, the report said, adding that despite downward revisions, growth in India remains "strong" amid robust domestic demand.