The World Bank noted three biggest challenges before the Indian economy : March 2018

Temporary economic disruptions caused by demonetisation and the GST are over and India can grow at 7.5% in the next two years, but for the country to join the join the ranks of middle-income countries, it needs an 8% plus GDP growth for 30 years. This could be quite challenging as the historic trend show that even as India’s economic growth has been stable and resilient, the 8% growth lasted only one to two years, and corrected sharply in the years after.

The World Bank noted three biggest challenges before the Indian economy:

1. Managing Natural Resources

The World Bank said that the fundamental constraint to India’s long-run growth is the scarcity of natural resources. India can achieve the 8% growth rate only if a resource efficient growth path is adopted. After GST, the reforms should focus on cities to make them efficient by improving connectivity and transport infrastructure and by enhancing urban service delivery; agriculture by helping farmers avoid constraints from depleting resource bases, enhancing protecting water resources and focusing reforms on removing distortions in the electricity sector.

2. Generating Salaried Jobs

The World Bank said that India needs to focus on inclusive, productivity-led growth that generates salaried jobs for India’s growing population. Achieving this requires reforms in two areas: building an investment environment that is conducive for the development of high productivity firms requires easing bottleneck on firms and reforms should focus on developing a qualified workforce that meets the skill demands of a globally competitive industry.

3. Strengthening public sector

One of the biggest task ahead of the government is to address challenges to public sector effectiveness o ensure that reforms are effectively implemented and to meet the demands of the growing middle class. Improving governance in India involves reforms rather than simply increased investments.  In addition to enhancing the efficiency, effectiveness and accountability of the Indian public sector, reforms should also focus on adequately resourcing public service providers and improving the coordination between different layers of government, the World Bank said.

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