India's Growth May Benefit From Accelerated Implementation Of Reform Agenda, Says World Bank The report said addressing the aftermath of financial sector distress in India could unlock significant growth
By Teena Jose
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India's potential growth could benefit from accelerated implementation of an already ambitious reform agenda, the World Bank said in a new report that warns that the global economy faces the prospect of a 'lost decade' on account of nearly all drivers of economic progress in recent history fading, according to a PTI report.
The report titled 'Falling Long-Term Growth Prospects: Trends, Expectations, and Policies' said the global economy's 'speed limit' — the maximum rate of long-term growth without causing inflation — is set to decline to its lowest point in three decades by 2030. "In the decade before COVID-19, a global slowdown in productivity -- which is essential for income growth and higher wages -- was already adding to concerns about long-term economic prospects," said the report.
Furthermore, according to the report, the investment growth is weakening, the global labour force is growing sluggishly, human capital reversals have been triggered by the coronavirus pandemic, and growth in international trade is barely matching GDP growth.
"The result could be a lost decade in the making -- not just for some countries or regions as has occurred in the past -- but for the whole world. Without a big and broad policy push to rejuvenate it, the global average potential GDP growth rate... is expected to fall to a three-decade low of 2.2 per cent a year between now and 2030, down from 2.6 per cent in 2011-21," added the report.
While India has been growing at a faster pace than peers, its "growth could benefit from accelerated implementation of an already ambitious reform agenda," it said. The report said addressing the aftermath of financial sector distress in India could unlock significant growth.
"India has a less developed financial system than many of its peers, with a heavy state presence. To improve the sector's efficiency and depth, reforms could be undertaken to further rationalise the role of public sector banks, ensure a level-playing field in the banking sector, and promote the development of capital markets," noted the report.
While elaborating on India's infrastructure deficit, the World Bank said reforms suggested by the Task Force on the National Infrastructure Pipeline should be implemented, including improving project preparation processes, enhancing the capacity and participation of the private sector, improving contract enforcement and dispute resolution, and improving sources of financing.
While India has been growing at a faster pace than peers, its "growth could benefit from accelerated implementation of an already ambitious reform agenda," the report further added.
