- February 14, 2018
- Posted by: nitin
- Category: Feed
October 2016 World Bank global GDP report said: ‘South Asia has defied a sluggish world economy and solidified its lead as the fastest growing region in the world in 2016. Given its weight in the region, India sets the pace for South Asia as a whole. Its economic activity is expected to accelerate to 7 per cent in 2017, after maintaining a solid 7.6 per cent in 2016.
India’s performance is based on solid growth contributions from consumption — boosted by normal monsoon and civil service pay revisions. Over the medium term, accelerated infrastructure spending and a better investment climate may help increase private investment and exports’.
The most important are the reforms of monetary policy and financial policy under the Reserve Bank of India and the institution of a Goods and Services Tax, scheduled for this year.
As a consequence of this extensive programme of economic reforms, the Indian economy has gradually gained momentum and is now the world’s most rapidly growing major economy. This is likely to continue for the next decade and, possibly, longer.
Comparing India with China, which has been the fastest growing economy until 2015. While India’s performance has been impressive, starting point is that China and India were at the same level of per capita income in 1990.
Over the past decade India has had mediocre performance on monetary and fiscal policy, but is now doing much better in both dimensions. A full realisation of India’s success in these areas is still a year or two ahead of us. This is very soon and that the results are already impressive. For example, the RBI has managed to maintain its newly established independence from the ministry of finance.
India will have to be much more successful in employment creation in order to exploit its demographic dividend. The most important issue in the short run is employment creation. India has made great strides in controlling inflation and is restoring the fiscal balance. Neither of these is likely to result in a permanent policy failure.
India is already a great success story and will continue to grow rapidly for the next decade and beyond. Furthermore, India is facing important opportunities that go far beyond those exploited by China and, so far, the evidence is that India will be able to deal exploit these opportunities, especially the demographic dividend.