BENGALURU- India’s economy will grow at a solid pace for the rest of this fiscal year and next but well below its potential rate, according to a Reuters poll of economists who also said the employment situation will improve only slightly.
The world’s most populous country aspires to leapfrog to the status of a developed nation, riding on the unprecedented demographic dividend, which demands an annual gross domestic product (GDP) growth rate of around 8 percent for the next 25 years.
But reaching this milestone hinges on implementing key reforms in education, infrastructure, healthcare and technology.
“If we want to realize that 8 percent growth potential this decade … the biggest challenge before policymakers is to reallocate the surplus labor from agriculture to more productive sectors with gainful jobs in them,” said Dhiraj Nim, economist at ANZ Research.
“If India’s reform momentum is lacklustre, a less exciting picture is on the cards.”
The latest Reuters poll of 53 economists taken between July 1 and 21 showed the Indian economy would grow 6.1 percent this fiscal year, a respectable rate when other major economies are expected to slow, maintaining a conducive environment for job creation.
It was forecast to grow 6.5 percent next fiscal year, with expectations of 6.2 percent growth this quarter, followed by 6.0 percent and 5.5 percent. The outlook was largely unchanged from a June poll.
“I think 6.0 percent to 6.5 percent is a very achievable and a very conservative forecast for India’s growth trajectory,” Nim added.
World Bank President Ajay Banga recently said the key to India’s growth story is through more jobs as he outlined the opportunity to cash in on the “China Plus One” strategy, a scheme adopted by many companies to build manufacturing units outside of the People’s Republic.
Asked how the employment situation will change over the coming year, 17 of 25 economists said it will improve slightly.
