World Bank Chief Economist: Indian Economy Doing Well

In an interview with the Economic Times, Professor Kaushik Basu, chief economist of World Bank remarked, “If you look at the growth table of performance among big economies all over the world, India, today in our World Bank table, tops the chart and this has never happened before. So overall the economic situation is good.”

Kaushik Basu

Kaushik Basu

However, with the global scene taking a turn for the worst, he cautioned that reforms and policy vigilance was very important. “There are risks to global growth. It can slowdown more and if that happens it is bound to affect India because today no country is isolated. But the main sector where India has to pay a lot of attention is India’s export sector where India has not done well despite the fact that India is the fastest growing major economy in the world… and a lot of attention ought to get this back again to full steam.”

April 4, 2016   No Comments

World Bank Projects India Will Be the Fastest-Growing Economy until 2018

The Wall Street Journal reports on the new forecasts from the World Bank which says that India is “well positioned to withstand near-term headwinds and volatility in global financial markets” compared with other major emerging economies and predicts it will grow at 7.9% by 2018.

That would make it the fastest-growing developing-country economy by some margin, ahead of the next quickest, Bangladesh, at 6.8% and China at 6.5%, according to the latest  Global Economic Perspectives report published by the bank.

Table below from World Bank Group 2016. Global Economic Prospects, January 2016: Spillovers amid Weak Growth. Washington D.C.

Country

2013

2014

2015 estimate 2016 forecast 2017 forecast 2018 forecast
World

2.4

0.6

2.4

2.9

3.1

3.1

U.S.

1.5

2.4

2.5

2.7

2.4

2.2

Euro Area

-0.2

0.9

1.5

1.7

1.7

1.6

Japan

1.6

-0.1

0.8

1.3

0.9

1.3

United Kingdom

2.2

2.9

2.4

2.4

2.2

2.1

Russia

1.3

0.6

-3.8

-0.7

1.3

1.5

China

7.7

7.3

6.9

6.7

6.5

6.5

Indonesia

5.6

5

4.7

5.3

5.5

5.5

Thailand

2.8

0.9

2.5

2

2.4

2.7

Kazakhstan

6

4.4

0.9

1.1

3.3

3.4

Turkey

4.2

2.9

4.2

3.5

3.5

3.4

Romania

3.5

2.8

3.6

3.9

4.1

4

Brazil

3

0.1

-3.7

-2.5

1.4

1.5

Mexico

1.4

2.3

2.5

2.8

3

3.2

Colombia

4.9

4.6

3.1

3

3.3

3.5

Egypt

2.1

2.2

4.2

3.8

4.4

4.8

Iran

-1.9

4.3

1.9

5.8

6.7

6

Algeria

2.8

3.8

2.8

3.9

4

3.8

India

6.9

7.3

7.3

7.8

7.9

7.9

Pakistan

4.4

4.7

5.5

5.5

5.4

5.4

Bangladesh

6.1

6.5

6.5

6.7

6.8

6.8

South Africa

2.2

1.5

1.3

1.4

1.6

1.6

Nigeria

5.4

6.3

3.3

4.6

5.3

5.3

Angola

6.8

3.9

3

3.3

3.8

3.8

The World Bank said India would benefit because of a reduction in external vulnerabilities, a strengthening domestic business cycle and a supportive policy environment.

 

January 17, 2016   No Comments

India Bucks Slowdown Trend in Emerging Markets

In a new policy research note ‘Slowdown in Emerging Markets: Rough Patch or Prolonged Weakness?’ the World Bank noted that “growth in BRICS, with the exception of India, has been slowing significantly after 2010. These slowdowns are expected to continue over the near term.”

Emerging market growth has been fading steadily since 2010, slipping from an average 7.6 per cent in 2010 to a projected less than 4 percent this year. Some of the contributing factors have been weak international trade, slowing capital flows and slumping commodity prices, external challenges which have compounded domestic problems including blunted productivity and bouts of political uncertainty, the report added.

The World Bank said that while many emerging markets have implemented reforms in specific areas, a few have announced comprehensive structural reform plans, including China, India, and Mexico. India formally adopted inflation targeting in 2015, thus strengthening the credibility of the central bank, reduced barriers to FDI in insurance, telecommunications, railways, and retail, eliminated diesel subsidies while raising excise duties on petroleum and diesel fuel, approved the introduction of a harmonized goods and services tax, and committed to increasing public investment, it noted reports SiliconIndia News,

December 11, 2015   No Comments

India’s Economy is Now Growing Faster than China’s

Last year, economists at the World Bank, the International Monetary Fund, and Goldman Sachs  suggested that within a year or two, India’s economy might be growing more quickly than China’s.  But official statistics published on February 9th revealed that India’s GDP rose by 7.5% in 2014, a shade faster than China’s economy managed over the same period (see chart).

India and China GDP Comparision

India and China GDP Comparison

India’s statistics were “re-based” a week ago and the base year for calculation of GDP was revised from 2004-05 to 2011-12, and partly as a result, GDP growth for 2013-14 was also revised from 5.1% to 6.9%. Economists agree that the economy is doing better now than it was in 2013 and that India has been a rare bright spot among emerging markets.

The economy is likely to pick up further since the recent falls in commodity prices are a godsend for India which imports 80% of the oil it consumes; Indians are happy that the double-digit inflation in the country has decreased for this trend has prompted India’s central bank to reduce interest rates in January, from 8% to 7.75%.

February 17, 2015   No Comments

Can India Rise to the Top 50 in “Ease of Doing Business?”

“India’s ranking in the 2016 World Bank report should significantly improve and we are confident that our rank will be within the top 50 in the 2017 report,” says an official involved in the ease of doing business exercise. The target rank of 50 has been given by the Prime Minister , and many officials across ministries and departments have been working on the task of improving India’s business environment by May 31 this year.

The government has already stipulated the introduction of risk-based inspection in export-import,  as one of its many targets for creating a business friendly environment. It is also planning to reduce the number of mandatory documents for exports and imports by merging some of them in a way that only three documents (against six currently), will be required for export, and only four documents, (against seven currently), will be mandatory for import.

Aware that the state governments will need to be on board for the success of this exercise, the Department of Industrial Policy and Promotion, the nodal agency coordinating the ease of doing business exercise, has sent a detailed “to-do” list not only to the federal ministries but the states too, along with deadlines for each task to be achieved.

 

Ease of Doing Business Indicators 1-3 Steps to Be Taken Challenge
Indicator 1: Starting a Business Integration of: director ID number; name availability of company, payment of registration fees & stamp duties.Removal of: Requirement of company seal; minimum paid-up capital for a company.

Single window clearances online for registration and tracking of applications

Amending the Companies Act 2013 – expected to be done in March 2015
Indicator 2: Dealing with Construction Permits Deputation of officers in municipal corporations for speedy processes.Consolidation of building laws at national and state levels.

Waiving: Inspection for low-risk buildings; and NOC from Airports Authority of India for buildings outside notified areas.

 

4 Key Ministries and the states will need to be aligned
Indicator 3: Getting Electricity Submission of online application; fixing a week’s time for inspection; preparation of estimates.Time-bound inspection for installation and connection.

Allowing 3rd party certification of installation.

Waiving pollution control certificates as a prerequisite for electricity connections.

 

Ministry of Power has to take the states on board to get desired results

 

February 12, 2015   No Comments