New Delhi: Whether the slowing Indian economy will revert to a path of faster growth is a million-dollar question. Amid rising public criticism of dismal performance on the economic front, the OECD, warding off a gloomy scenario, has painted a rather positive forecast for India.
It says despite the recent slag in growth rates since the middle of 2018, India is poised to grow at 6.4 per cent of the GDP in 2021, after rising gradually from 6.2 per cent in 2020.
India’s growth story has encountered a hiccup with current year growth projections being revised downwards from 6.1 per cent to less than 5 per cent.
Releasing the report on Thursday, OECD Chief Economist Laurence Boone, said: “India is now well established as a growth champion and a major player in the global economy…However, this slower pace of growth underlines the need to fully implement existing reforms and continue lowering barriers to trade to generate the investment and jobs India needs to raise living standards across the country.”
The much-awaited report of the Paris-headquartered OECD underlined the traditionally-held notion of the Indian economy having strong fundamentals.
Read more:RBI sharply lowers growth projection to 5% for current fiscal
“Restoring growth to the higher levels needed to provide ample jobs and ease inequality will require accelerating the pace of structural reforms to revive investment and exports,” the report says.
Dwelling on the negatives, the report pointed out to the heavy concentration of wealth with the richest 1 per cent of Indians holding over half of the country’s wealth, deceleration in private and consumption particularly rural, slow industrial production, liquidity worries in the nonbanking financial companies (NBFCs), fuel price volatility, etc.
On the brighter side, the report alluded to sturdy exports that have proved relatively resistant to the slowdown in global growth, low inflation since 2014, marked improvement in the Goods and Services Tax (GST) administration even as ongoing efforts to improve trade infrastructure, logistics and processes are “starting to pay off”.
A few important trends the report took note of the slide of current account deficit to less than 2.5 per cent of GDP, buoyancy in exports which is reflective of the specialisation of India in fast growing sectors, hefty remittances from abroad, and a very healthy foreign exchange reserves.
Providing a forum for governments to work together, OECD is an international organisation that promotes policies to improve the economic and social well-being of people worldwide. Its 36 members are among the world’s most economically developed countries while India, along with Brazil, China, Indonesia and South Africa, is one of the OECD’s five Key Partners.
