Wednesday, January 28, 2015

World Bank Forecasts India to Become World’s Fastest Growing Economy By 2017


India is on the verge of becoming the fastest growing big economy in the world in 2017. World Bank has released a forecast which shows India edging past the China at an estimated growth rate of 7% in its GDP whereas the rival neighbour China would growth grow at 6.9%. This report was published in the World Bank’s flagship publication called Global Economic Reports. This influential report even warns India that having any possible slackening in the reform momentum would result in slowing down in economy growth and its pace of recovery.

Deceleration in China’s Economy A Boon For Indian Economy

For several years in a row China has projected itself as one of the fastest growing economy but in coming years in expected to slow down to 7.1%. Last year it was growing at a robust pace of 7.4% and it is going decelerate further to 7% and by 2017 it will touch the 6.9% mark. The relative sizes of the two giant economies of Asia shows a wide gap. China’s economy was at $9.2 trillion whereas India’s $1.87 trillion which certainly means that India had a really long way to go. World Bank report has characterised the China’s eventual deceleration as a carefully managed slowdown

India Expected To Touch 7% Growth Rate Earlier Than Expected

The Bangkok based United Nations Economic and Social Commission for Asia and the Pacific commonly known as ESCAP have published separate report which projects the growth of Indian economy at the pace of 6.4% for the current year. International Investment bank Golsman Sachs shows another turn and expects that India would achieve the projected growth rate of 7% a year in advance and it nudges past China smoothly.

Indian economy would be helped by the steep falling in oil prices and other energy commodities as well as by the low interest rate in developing countries. India should employ this falling oil price window by ushering the fiscal and structural reforms and boosts it long-run growth as well as inclusive development. Both ESCAP and the World Bank have rightly pointed towards cutting fuel subsidies and diverting funds for the financial sustainable development.

Global Growth Rate To Rise

Global growth rate is expected to rise by 0.4% to register 3.0% in 2015 from 2.6 in 2014. Further reports suggest it will rise to 3.3% in 2017. Developing countries is expected show a growth rate of 2.2% this year from 1.8% in 2014 and by 2.3 % in 2017.

ESCAP report states that India is very genuinely identified the infrastructural development as the key element for economy growth but it does face shortage of government resources. ESCAP therefore recommends for giving importance to private sector in infrastructure development as well as collaborating with government. World Bank report states that reforms and regulations by the government in India should aim towards boosting foreign direct investment. Increase in investments would help the nation in achieving the growth rate of 7% by 2016.

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