India's growth estimate retained at 7.5% for 2015-16: World Bank

[ito]

The World Bank has retained its Indiagrowth forecast for 2015-16 saying it will continue to grow, but the catch is the acceleration year-on-year will be gradual.

"The latest India Development Update expects India's economic growth to be at 7.5% in 2015-16, followed by a further acceleration to 7.8% in 2016-17 and 7.9% in 2017-18," the multilateral lending agency said in a report released here.

"However, acceleration in growth is conditional on the growth rate of investment picking up to 8.8% during FY16 to FY18," it added.


Speaking at the launch of the report, World Bank India's Senior Country Economist Frederico Gil Sander said India has taken advantage of the sharp decline in global oil andcommodity prices to eliminate petrol and diesel subsidies and increase excise taxes.

"Resources from lower subsidies and higher taxes have been well utilised in lowering deficits and increasing capital expenditure."

The most significant risks to the outlook, he further said, stem from the banking sector and financing requirements of infrastructure companies.

"Public sector banks, which account for three-fourths of domestic credit, are under stress, with a rising share of non-performing assets," Gil Sander noted.

The senior economist felt that India is relatively well-positioned to weather global volatility in the short term.

The report dwelt at length on states, which are now responsible for 57% of spending and account for 16% of GDP. Of this, nearly 74% of the funds are untied compared with an average 57% during the 13th Finance Commission period, getting more flexibility to states.

It suggested that the government need to collect more direct taxes to boost revenues.

"India's direct tax collection is among the lowest in the world. Direct taxes account for a mere 5.7% of GDP in India compared with 11.4% in OECD countries," the report said.

Making a special mention of the government's efforts for successfully bringing current account deficit (CAD) down to 1.4% in 2015-16, it said CAD is likely to inch up to 1.7% in 2016-17 and 2% in 2017-18.

Stressing on the need to increase export-oriented growth, the report said, "Although India may be able to achieve a fast GDP expansion without export growth for a short period, sustaining high GDP rates over a longer period will require a recovery of exports."

India's growth estimate retained at 7.5% for 2015-16: World Bank | Latest News & Updates at Daily News & Analysis

 

[itachii]

A growth rate of 7.5% will take us nowhere. we need a sustained double digit growth for atleast 5-10 years to bring down the poverty rate to a single digit..

 

[ito]

A growth rate of 7.5% will take us nowhere. we need a sustained double digit growth for atleast 5-10 years to bring down the poverty rate to a single digit..

Sub 8% till 2018...

"The latest India Development Update expects India's economic growth to be at 7.5% in 2015-16, followed by a further acceleration to 7.8% in 2016-17 and 7.9% in 2017-18," the multilateral lending agency said

 

[Nilgiri]

A growth rate of 7.5% will take us nowhere. we need a sustained double digit growth for atleast 5-10 years to bring down the poverty rate to a single digit..

This is real economic growth. Nominal growth will be in double digits most likely.

 

[ito]

This is real economic growth. Nominal growth will be in double digits most likely.

Inflation doesn't create value.

 

[itachii]

This is real economic growth. Nominal growth will be in double digits most likely.

Inflation won't make any difference in poor man's life, it infact adds to his woes.. we desperately need a double digit growth rate to reduce the poverty and close the gap with china.

 

[Nilgiri]

Inflation doesn't create value.

Inflation won't make any difference in poor man's life, it infact adds to his woes.. we desperately need a double digit growth rate to reduce the poverty and close the gap with china.

Agree with you both. However we have only barely touched double digit REAL growth once (in 2010) and this same real growth was as low as 5% just few years back and lower than 4% in 2008. Since 1991, the real growth has compound averaged at around 6.8%. It will take Modi this term at least to bring a double digit real growth rate (for his second term) given the shambles of and economy he inherited from the previous administration. It could come earlier but that will be a bonus imho.

But he is taking a strong interest on the matter unlike SilentMohan Singh, thats for sure:

Once every month, PM Modi steps in to slash red tape and move along projects - The Times of India

 

[lightoftruth]

These figures are projected assuming absence of GST in coming years.

 

[AyanRay]

Inflation won't make any difference in poor man's life, it infact adds to his woes.. we desperately need a double digit growth rate to reduce the poverty and close the gap with china.

Mostly true, but not entirely. Depends on the commodity which is causing the inflation. Look at the present situation, capital goods like iron and steel and also fuel are having inflation on -5%, while food inflation is 6%, (approx value) . The net GDP deflator comes to 0%, (Its not CPI or WPI, but the inflation rate of entire economy).

So its good for the industries who take capital goods as their inputs , but since food inflation has risen, it takes away the purchasing power of the poor.

Inflation also acts as a stimulus for growth, Producers are encouraged to produce more if they get a higher price for the commodity. Inflation around 4% is best for a developing nation as ours. Deflation on the other hand is worse than very high inflation.

 

[Vedicity]

I assume this means that India is on track to become a superpower by 2020.

 

[Shotgunner51]

Inflation won't make any difference in poor man's life, it infact adds to his woes.. we desperately need a double digit growth rate to reduce the poverty and close the gap with china.

Why use China as benchmark?

 

[Jlaw]

Why use China as benchmark?

Bro, since you're the economics expert do you find the title misleading?

Growth vs GDP growth is that two different things. In this case, growth of 7.5% does not factor in inflation whereas actual GDP growth does?

 

[Nilgiri]

In this case, growth of 7.5% does not factor in inflation whereas actual GDP growth does?

This is REAL GDP growth with constant prices.

Nominal GDP growth with current prices (and inflation) will be higher, more than 10%.

 

[Abingdonboy]

The World Bank has retained its Indiagrowth forecast for 2015-16 saying it will continue to grow, but the catch is the acceleration year-on-year will be gradual.

"The latest India Development Update expects India's economic growth to be at 7.5% in 2015-16, followed by a further acceleration to 7.8% in 2016-17 and 7.9% in 2017-18," the multilateral lending agency said in a report released here.

"However, acceleration in growth is conditional on the growth rate of investment picking up to 8.8% during FY16 to FY18," it added.


Speaking at the launch of the report, World Bank India's Senior Country Economist Frederico Gil Sander said India has taken advantage of the sharp decline in global oil andcommodity prices to eliminate petrol and diesel subsidies and increase excise taxes.

"Resources from lower subsidies and higher taxes have been well utilised in lowering deficits and increasing capital expenditure."

The most significant risks to the outlook, he further said, stem from the banking sector and financing requirements of infrastructure companies.

"Public sector banks, which account for three-fourths of domestic credit, are under stress, with a rising share of non-performing assets," Gil Sander noted.

The senior economist felt that India is relatively well-positioned to weather global volatility in the short term.

The report dwelt at length on states, which are now responsible for 57% of spending and account for 16% of GDP. Of this, nearly 74% of the funds are untied compared with an average 57% during the 13th Finance Commission period, getting more flexibility to states.

It suggested that the government need to collect more direct taxes to boost revenues.

"India's direct tax collection is among the lowest in the world. Direct taxes account for a mere 5.7% of GDP in India compared with 11.4% in OECD countries," the report said.

Making a special mention of the government's efforts for successfully bringing current account deficit (CAD) down to 1.4% in 2015-16, it said CAD is likely to inch up to 1.7% in 2016-17 and 2% in 2017-18.

Stressing on the need to increase export-oriented growth, the report said, "Although India may be able to achieve a fast GDP expansion without export growth for a short period, sustaining high GDP rates over a longer period will require a recovery of exports."

India's growth estimate retained at 7.5% for 2015-16: World Bank | Latest News & Updates at Daily News & Analysis

Very underwhelming really, India needs a 10-15 year period where it averages 9-10% growth yearly.

It certainly seems this is assuming no GST as @lightoftruth has pointed out. That move alone could boost growth by 0.7-1.2%.

Fingers crossed the NDA can get the seats in the RS and avoid the needless disruptions that have so defined the past parliament sessions. Some consensus building needs to take place and hopefully Modi can learn from the results (or lack thereof) his belligerent attitude delivered during the Monsoon session.

The time to get GST moving is NOW, not in 5 years- the lost productivity a lack of GST has inflicted on the Indian economy is in the high hundreds of billions and with every year that goes by this bill is increasing by tens of billions.

@Bang Galore @MilSpec @Koovie @nair @Star Wars @Dash @levina

 

[Dungeness]

The World Bank has retained its Indiagrowth forecast for 2015-16 saying it will continue to grow, but the catch is the acceleration year-on-year will be gradual.

"The latest India Development Update expects India's economic growth to be at 7.5% in 2015-16, followed by a further acceleration to 7.8% in 2016-17 and 7.9% in 2017-18," the multilateral lending agency said in a report released here.

"However, acceleration in growth is conditional on the growth rate of investment picking up to 8.8% during FY16 to FY18," it added.


Speaking at the launch of the report, World Bank India's Senior Country Economist Frederico Gil Sander said India has taken advantage of the sharp decline in global oil andcommodity prices to eliminate petrol and diesel subsidies and increase excise taxes.

"Resources from lower subsidies and higher taxes have been well utilised in lowering deficits and increasing capital expenditure."

The most significant risks to the outlook, he further said, stem from the banking sector and financing requirements of infrastructure companies.

"Public sector banks, which account for three-fourths of domestic credit, are under stress, with a rising share of non-performing assets," Gil Sander noted.

The senior economist felt that India is relatively well-positioned to weather global volatility in the short term.

The report dwelt at length on states, which are now responsible for 57% of spending and account for 16% of GDP. Of this, nearly 74% of the funds are untied compared with an average 57% during the 13th Finance Commission period, getting more flexibility to states.

It suggested that the government need to collect more direct taxes to boost revenues.

"India's direct tax collection is among the lowest in the world. Direct taxes account for a mere 5.7% of GDP in India compared with 11.4% in OECD countries," the report said.

Making a special mention of the government's efforts for successfully bringing current account deficit (CAD) down to 1.4% in 2015-16, it said CAD is likely to inch up to 1.7% in 2016-17 and 2% in 2017-18.

Stressing on the need to increase export-oriented growth, the report said, "Although India may be able to achieve a fast GDP expansion without export growth for a short period, sustaining high GDP rates over a longer period will require a recovery of exports."

India's growth estimate retained at 7.5% for 2015-16: World Bank | Latest News & Updates at Daily News & Analysis

I just read an article about Indian GDP growth result in Apr. to June this year, it slowed down to 7% from 7.5% percent. What happened?


Not satisfied with present growth rate, India aspires for more, says Jaitley - Firstpost