Reform steps hearten World Bank
India economy is expected to grow by about 5.5 per cent this year, according to initial estimates by the World Bank. It means the multilateral agency expects the economy to grow by more than 5.5 per cent in the October-December quarter.
The Bank might also peg India’s GDP to grow by a little less than six per cent next year and seven per cent in 2014 and 2015.
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Kaushik Basu, senior vice-president & chief economist at the World Bank (he was India’s chief economic advisor till a few months earlier), today told a press conference on the sidelines of an economic conclave that the multilateral institution was likely to peg India’s growth at 5.5 per cent in 2012.
He added reforms initiated by the government, especially direct cash transfers, could be a game changer for the poor and help the economy return to a high-growth trajectory.
India’s economy grew 5.3 per cent in the fourth quarter (January-March) of 2011-12. The average growth in the first six months (April-September) of financial year 2012-13 was 5.4 per cent. Growth of 5.5 per cent in calendar year 2012 would be possible only when the GDP growth in October-December is higher than 5.5 per cent.
“You could expect it to be just short of six per cent in the next year and seven per cent in 2014 and 2015," Basu said. He added the numbers might undergo some change when the Bank formally announced it on January 15.
The next year, he cautioned, would be very hard for India’s growth trajectory, primarily because of a global slowing. A very few countries, such as Indonesia and Thailand, were growing at a six to seven per cent rate, he noted.
“The European situation will remain very difficult up to the end of 2014 and maybe in the beginning of 2015. That is going to rub off on India but if it can begin to move up to six-seven per cent in this difficult situation, that would be good."
He said India had enough fundamental strength. “If you work on this, there is no reason why the country can’t get back to eight-nine per cent growth," Basu added.
Asked if the reforms initiated by the government in the recent months could catapult growth, Basu said, “Catapult is a strong word but the reforms, including the talk of direct cash transfer, hearten me."