According to the GDP growth forecast released by World Bank, India is all set to grow at the rate of 7.3% in the year 2018. This is higher than the growth rate of 6.7% witnessed in the year 2017. The World Bank noted that India has shaken off the impact of demonetisation and Good and Service Tax (GST) implementation that caused growth to slow down in the year 2017.
The World Bank also forecasted GDP growth of 7.5% for the years 2019 and 2020. Among the major factors affecting GDP, the bank forecasts growth in private consumption, government consumption, imports, exports, etc. While agricultural growth is expected to decline in the upcoming years, industrial growth is expected to increase significantly after its growth slowed down in 2017 due to demonetisation and GST.
While the Indian economy is currently in the growth phase, it needs to take a lot more steps in order to achieve 8% growth level. Moreover, this level of growth can be sustained by incorporating various structural reforms. The biannual South Asia Economic Focus also warned about the two crucial growth engines that have underperformed in India.
The statement noted that private investment has declined recently following the impact caused by demonetisation and GST. This can be mainly attributed to a slowdown in credit supply and lack of investment opportunities. Another factor is the slowdown witnessed in exports and India’s contribution to world trade. The revival of these two conditions will require structural forms and the ability to drive investment growth in key sectors.
In terms of employment, the World Bank noted that this is not jobless growth. India generates a workforce of 1.3 million every month. It must create 8.1 million jobs every year to sustain the current level of employment rate. The data analysed employment rate from the year 2005 to 2015 and reported a decline due to women leaving the job market.