But also warns about "fragile and uncertain" economic recovery
Trithesh Nandan | January 16, 2013
The sluggish growth rate of India’s economy in the last one year will be a thing of past, says the World Bank which expects it to post 6.8 and 7 percent growth by 2014 and 2015 respectively and inch closer to the growth rate of China. However, the bank in the ‘Global Economic Prospects (GEP)’ report expects India to grow at 6.1 percent in the financial year 2013.
The report, released on Wednesday, says India’s improved growth will let it to catch up with its immediate neighbour China in two years. “In 2015, China will grow at 7.9 percent while India will grow at 7 percent,” it notes.
"We do expect India to inch closer to China and for a very, very good reason -- not an analysis of what's happened over the last one year or two years, but a bit of a sweep of history," said Kaushik Basu, chief economist of the World Bank.
But the World Bank has also asked India to safeguard the economic growth. "The economic recovery remains fragile and uncertain, clouding the prospect for rapid improvement and a return to more robust economic growth," said World Bank group president Jim Yong Kim.
The report also says India will conduct general elections in 2014 but warns, “Although governments across the region have committed to tackling their large subsidy burdens and fiscal deficits, such efforts could get side-tracked by spending pressures, especially with elections scheduled in several countries in the next two years.”
Despite a few dangers, in the next two years, the South Asian region will boost growth prospects. The Washington DC-based organisation said the improvement in growth prospect will be driven by policy reforms in India, stronger investment activity, normal agricultural production and improvement in export demand.
However, the 178-page report mentions that to regain pre-crisis growth rates the developing nations will need to focus on productivity-enhancing domestic policies rather than demand stimulus.
The World Bank estimates global GDP grew 2.3 percent in 2012, compared with last June’s expectation of 2.5 percent. “Growth is expected to remain broadly unchanged at 2.4 percent growth in 2013, before gradually strengthening to 3.1 percent in 2014 and 3.31 percent in 2015,” according to the report.
Read the report