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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