Skip to main content

World Bank steps up pressure, tells India to quickly "reform" economy, lest 7.7% growth not achieveable in 2017

Amidst continued apprehensions that Prime Minister Narendra Modi does not seem interested in his announced neo-liberal "economic reforms" to further open up the Indian economy to world investors, the World Bank has stepped up its pressure saying India can achieve 7.7 per cent rate of growth in 2017 only if it early quickly moves in that direction; lest it would miss the bus.
The World Bank, even as releasing its report titled, "South Asia Economic Focus Spring 2016: Fading Tailwinds", has stated, "Economic growth in India expected to be 7.7 percent in 2017 compared to 7.5 percent in 2015", but warns Indian policy makers that "delays in the adoption and implementation of key reforms could affect investor sentiment."
The remark comes amidst the Government of India failing to bring about a consensus on dropping what the World Bank believes was a "retrograde" land acquisition Act, 2013. Also, there are few efforts, the World Bank point of view, to try to drop subsidies going into the agriculture sector.
It said, "Favorable overall trends mask important underlying divergences: between urban and agricultural households; between domestic and external demand; and between public and private capital expenditure, which should be addressed."
Pointing out that, thanks to India, South Asia "remains world's fastest growing region, but should be vigilant to fading tailwinds, it said the country's economy can look up if it is "supported by a rebound in agriculture and stimulus from civil service pay reforms", the World Bank underlines, the region "should worry about global turbulent."
The World Bank said, "Led by robust growth in India, South Asia shows resilience in the face of turbulent international markets and remains the fastest-growing region in the world, with economic growth forecasted to gradually accelerate from 7.1 percent in 2016 to 7.3 percent in 2017."
In a twice-a-year report, "South Asia Economic Focus", the World Bank said, "The region’s economic performance prospects remain strong due to its limited exposure to global turbulence, coupled with increasing investment activity."
"However", it pointed out, "There are also signs of fading tailwinds. Capital flows to the region have declined and remittances from oil exporting countries have started to weaken."
It further said, "Fuel and food prices remain low but are unlikely to keep falling. As a result overall output growth is slower than previously anticipated and inflation has recently been creeping up."
"Given its weight in the region, India sets the pace for South Asia as a whole", the World Bank said.
It added, "Economic activity is expected to accelerate from 7.5 percent in FY2016 to 7.7 percent in FY2017 based on the expectation of strong private investment, a push in infrastructure spending, an improved investment climate, and deleveraged corporate and financial balance sheets."
Quoting Annette Dixon, World Bank South Asia Vice President, the report said, “However, fiscal and financial vulnerabilities remain and countries should strive to address them through generating revenue and creating more fiscal space.”
The report’s analysis of fiscal policy across the region suggests that governments need to find a balanced path towards fiscal consolidation.
“Fiscal policy has a wide range of impacts for development. The fiscal deficit affect macroeconomic stability, capital expenditures are needed for growth, and taxes and social spending matter for equity,” the report quotes World Bank South Asia Chief Economist Martin Rama as saying.
"With the currently low oil prices, this is also an opportune time for South Asian policy makers to introduce or expand explicit carbon taxes. This would improve environmental and fiscal sustainability at the same time”, Rama insisted.
"Many South Asian countries show potential for accelerated growth in the short to medium term. However, the tailwinds of high levels of remittances coupled with low oil prices may be slowing down so countries should be well prepared for a more difficult global environment", the report said.

Comments

TRENDING

When Pakistanis whispered: ‘end military rule’ — A Moscow memoir

During the recent anti-terror operation inside Pakistan by the Government of India, called Operation Sindoor — a name some feminists consider patently patriarchal, even though it’s officially described as a tribute to the wives of the 26 husbands killed in the terrorist strike — I was reminded of my Moscow stint, which lasted for seven long years, from 1986 to 1993.

Ahmedabad's civic chaos: Drainage woes, waterlogging, and the illusion of Olympic dreams

In response to my blog on overflowing gutter lines at several spots in Ahmedabad's Vejalpur, a heavily populated area, a close acquaintance informed me that it's not just the middle-class housing societies that are affected by the nuisance. Preeti Das, who lives in a posh locality in what is fashionably called the SoBo area, tells me, "Things are worse in our society, Applewood."

Tracking a lost link: Soviet-era legacy of Gujarati translator Atul Sawani

The other day, I received a message from a well-known activist, Raju Dipti, who runs an NGO called Jeevan Teerth in Koba village, near Gujarat’s capital, Gandhinagar. He was seeking the contact information of Atul Sawani, a translator of Russian books—mainly political and economic—into Gujarati for Progress Publishers during the Soviet era. He wanted to collect and hand over scanned soft copies, or if possible, hard copies, of Soviet books translated into Gujarati to Arvind Gupta, who currently lives in Pune and is undertaking the herculean task of collecting and making public soft copies of Soviet books that are no longer available in the market, both in English and Indian languages.

RP Gupta a scapegoat to help Govt of India manage fallout of Adani case in US court?

RP Gupta, a retired 1987-batch IAS officer from the Gujarat cadre, has found himself at the center of a growing controversy. During my tenure as the Times of India correspondent in Gandhinagar (1997–2012), I often interacted with him. He struck me as a straightforward officer, though I never quite understood why he was never appointed to what are supposed to be top-tier departments like industries, energy and petrochemicals, finance, or revenue.

Environmental report raises alarm: Sabarmati one of four rivers with nonylphenol contamination

A new report by Toxics Link , an Indian environmental research and advocacy organisation based in New Delhi, in collaboration with the Environmental Defense Fund , a global non-profit headquartered in New York, has raised the alarm that Sabarmati is one of five rivers across India found to contain unacceptable levels of nonylphenol (NP), a chemical linked to "exposure to carcinogenic outcomes, including prostate cancer in men and breast cancer in women."

PharmEasy: The only online medical store which revises prices upwards after confirming the order

For senior citizens — especially those without a family support system — ordering medicines online can be a great relief. Shruti and I have been doing this for the last couple of years, and with considerable success. We upload a prescription, receive a verification call from a doctor, and within two or three days, the medicines are delivered to our doorstep.

A conman, a demolition man: How 'prominent' scribes are defending Pritish Nandy

How to defend Pritish Nandy? That’s the big question some of his so-called fans seem to ponder, especially amidst sharp criticism of his alleged insensitivity during his journalistic career. One such incident involved the theft and publication of the birth certificate of Masaba Gupta, daughter of actor Neena Gupta, in the Illustrated Weekly of India, which Nandy was editing at the time. He reportedly did this to uncover the identity of Masaba’s father.

Revisiting Gijubhai: Pioneer of child-centric education and the caste debate

It was Krishna Kumar, the well-known educationist, who I believe first introduced me to the name — Gijubhai Badheka (1885–1939). Hailing from Bhavnagar, known as the cultural capital of the Saurashtra region of Gujarat, Gijubhai, Kumar told me during my student days, made significant contributions to the field of pedagogy — something that hasn't received much attention from India's education mandarins. At that time, Kumar was my tutorial teacher at Kirorimal College, Delhi University.

A sector under siege? War and real estate: Navigating uncertainty in India's expanding market

I was a little surprised when I received an email alert from a top real estate consultant, Anarock Group , titled "Exploring War’s Effects on Indian Real Estate—When Conflict Meets Concrete," authored by its regional director and head of research, Dr. Prashant Thakur. I had thought that the business would wholeheartedly support what is considered a strong response to the dastardly terrorist attack in Pahalgam, Operation Sindoor.