Global Economic Prospects report 2019: Key Facts about India
The World Bank has released the Global Economic Prospects report 2019 titled “Darkening Skies”. The key findings of the report related to India are:
- India’s GDP is expected to grow at 7.3 per cent in the fiscal year 2018-19, and 7.5 per cent in the following two years. The growth rates are attributed to an upswing in consumption and investment.
- India would continue to be the fastest growing major economy in the world. The report estimates China’s growth to slow down to 6.2 per cent each in 2019 and 2020 and 6 per cent in 2021.
- China had an estimated growth rate of 6.5 per cent as against India’s 7.3 per cent in 2018.
- China’s growth rate at 6.9 per cent growth was marginally ahead of India’s 6.7 per cent in 2017 because of the slowdown witnessed in the Indian economy due to demonetisation and implementation of the Goods and Services Tax (GST).
- World Bank notes that domestic demand has strengthened as the benefits of structural reforms such as the GST harmonisation and bank recapitalisation take effect.
- Strong domestic demand may further widen the current account deficit to 2.6 per cent of GDP in 2020. Inflation is projected to be above the midpoint of the Reserve Bank of India’s target range of 2 to 6 per cent, mainly owing to energy and food prices.
- The introduction of the GST and demonetisation has encouraged a shift from the informal to the formal sector.
- Public sector banks in India, which represent roughly 70% of the banking sector assets, still report low profitability and high non-performing assets.
The report notes that growth performance of India as compared to other emerging markets has been quite impressive.