India Has Recovered From Note Ban And GST, Says World Bank Pegging Growth At 7.3%

| April 17 , 2018 , 11:14 IST

The World Bank on Tuesday noted that India's economy has recovered from the effects of demonetisation and Goods and Services Tax and forecast a growth rate of 7.3 percent for India this year and 7.5 percent for 2019 and 2020.

"Growth is expected to accelerate from 6.7 in 2017 to 7.3 percent in 2018 and to subsequently stabilise supported by a sustained recovery in private investment and private consumption," the World Bank said in its twice-a-year South Asia Economic Focus.

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The World Bank in its report advised that India should strive to accelerate investments and exports to take advantage of the recovery in global growth.

"Every month, the workforce increases by 1.3 million people and India must create 8.1 million jobs a year to maintain its employment rate, which has been declining based on employment data analysed from 2005 to 2015, largely due to women leaving the job market," the bank said.

The bank acknowledged that disruptions from demonetisation and events surrounding the implementation of GST led to a setback in economic activity for India. In FY2016, GDP growth slowed down to 7.1 percent from 8 percent in FY15/16, and further to 5.7 percent in Q1 FY2017.

The World Bank added that the most substantial medium-term risks are associated with private investment recovery which faces several domestic impediments such as corporate debt overhang, regulatory and policy challenges.

The bank added that if internal bottlenecks are not alleviated, subdued private investment would put downside pressures on India's potential growth.

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