The International Monetary Fund (IMF) on Tuesday said India should address labour market rigidities to create more jobs and undertake financial sector reforms to improve governance in public sector banks to contain downside risks to its medium-term growth prospects.<\/p>\n
In its bi-annual World Economic Outlook, IMF kept its growth projections for India unchanged at 7.4% for 2018-19 and 7.8% for 2019-20, holding that economic activity will be lifted by strong private consumption as well as fading transitory effects of demonetisation and implementation of the Goods and Services Tax. \u201cOver the medium term, growth is expected to gradually rise with continued implementation of structural reforms that raise productivity and incentivise private investment,\u201d it added.<\/p>\n
The IMF\u2019s forecast came after the World Bank, in its bi-annual South Asia Economic Focus report released on Sunday, said the economy had recovered from the adverse impact of note ban and GST and is projected to grow by 7.3% in 2018 and 7.5% in 2019.<\/p>\n
According to the IMF, global growth is projected to pick up to 3.9% this year and next, supported by strong momentum, favourable market sentiment, accommodative financial conditions, and the domestic and international repercussions of expansionary fiscal policy in the US. Over the medium term, global growth is projected to decline to about 3.7% due to a shift toward inward-looking policies that harm international trade and a potential further buildup of financial vulnerabilities that could give way to rapid tightening of global financial conditions, it warned.<\/p>\n
Over the medium term, China\u2019s growth is expected to gradually slow to 5.5% from 6.6% in 2018 with continued rebalancing from investment to consumption. \u201cHowever, rising non-financial debt as a share of GDP and the accumulation of vulnerabilities weigh on the medium-term outlook,\u201d IMF added.<\/p>\n
IMF said while acceleration in India\u2019s growth in the medium term will offset to China\u2019s gradual slowdown, an important challenge for India is to enhance inclusiveness. \u201cThe main priorities for lifting constraints on job creation and ensuring that the demographic dividend is not wasted are to ease labor market rigidities, reduce infrastructure bottlenecks, and improve educational outcomes,\u201d it said.<\/p>\n
The multilateral lending institution said the balance sheet vulnerabilities in India pose a downside risk to its medium-term growth prospects, requiring policy action. \u201cThe corporate debt overhang and associated banking sector credit quality concerns exert a drag on investment in India. The recapitalization plan for major public sector banks announced in 2017 will help replenish capital buffers and improve the banking sector\u2019s ability to support growth. However, recapitalization should be part of a broader package of financial reforms to improve the governance of public sector banks, and banks\u2019 debt recovery mechanisms should be further enhanced,\u201d it said.<\/p>\n
The World Bank, in its report, said Indian recovery will lift South Asia as a region and make it the world\u2019s fastest growing again, possibly even widening the lead over East Asia and the Pacific. It will drive South Asia growth to 6.9% in 2018 and 7.1% in 2019.<\/p>\n
\u201cSouth Asia had lost the lead as India decelerated for about five quarters, and now it is clear that India is bouncing back,\u201d the Bank\u2019s chief economist for South Asia Martin Rama said in an interview.<\/p>\n
\u201cThe acceleration of growth that we see in the region is not necessarily that all countries in the region are doing much better, it\u2019s a mixed picture, but given the size of India, India\u2019s bouncing back is driving the growth,\u201d he added.<\/p>\n
But job creation is a concern. Despite growth, India is not creating enough jobs.<\/p>\n
\u201cIndia must create 8.1 million jobs a year to maintain its employment rate, which has been declining largely due to women leaving the job market,\u201d the World Bank said.<\/p>\n
The decline on account of women dropping out is \u201chappening in areas that are borderline between urban and rural (and) as farming jobs disappear and other types of jobs do not appear,\u201d said Rama.<\/p>\n","protected":false},"excerpt":{"rendered":"
The International Monetary Fund (IMF) on Tuesday said India should address labour market rigidities to create more jobs and undertake financial sector reforms to improve governance in public sector banks to contain downside risks to its medium-term growth prospects. In its bi-annual World Economic Outlook, IMF kept its growth projections for India unchanged at 7.4% […]<\/p>\n","protected":false},"author":1,"featured_media":28427,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[410],"tags":[],"class_list":["post-28426","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts\/28426","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/comments?post=28426"}],"version-history":[{"count":1,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts\/28426\/revisions"}],"predecessor-version":[{"id":28428,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts\/28426\/revisions\/28428"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/media\/28427"}],"wp:attachment":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/media?parent=28426"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/categories?post=28426"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/tags?post=28426"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}