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World Bank shows green signals for India's growth numbers in the near future

After seeing a continuous fall in the last three quarters due to these reforms, the India Development Update, a report by World Bank released every six months points economic activity has begun to stabilize since August 2017.

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By CNBCTV18March 24, 2018, 10:39:37 AM IST IST (Updated)

World Bank shows green signals for India's growth numbers in the near future
The Indian economy is set to bounce back to its 7.5% growth rate trend in the near future as it seems to have bottomed out from the impact of its two major reforms in the past - Goods and Services Tax (GST) and demonetisation.


After seeing a continuous fall in the last three quarters due to these reforms, the India Development Update, a report by World Bank released every six months, points economic activity has begun to stabilize since August 2017.

The services will continue to remain the main driver of economic growth where industrial activity is poised to grow and manufacturing is expected to accelerate. Agriculture is also likely to grow at its long-term average growth rate, the report stated.

“Durable revival in private investments and exports would be crucial for India achieving a sustained high growth of 8% and above,” said Poonam Gupta, Lead Economist and the main author of the report.

“This will require continued impetus for structural reforms. Resorting to countercyclical policies will not help spur sustained growth and India should not compromise its hard-earned fiscal discipline in order to accelerate growth,” she added.

The reports have pointed a slow yet upward trend across all the sectors in the last 50 years, showing the economy to be stable. The upward trend has shown an increase in labour productivity and total factor productivity.

The report points to the positive impulse expected from India’s new tax regime and shows a thumbs up saying that it will likely improve the domestic flow of goods and services, help in formalising labour in the economy and in turn will enhance growth.

The report assesses that for India to sustain its growth path, the country will need to watch out for the changing landscape of open trade, reforms in the banking sector, strengthening financial institutions, among others.
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