India will catch up with China’s growth rate by 2016-17: World Bank

With the international community betting big on the India growth story under a reform-minded prime minister, the World Bank has projected that the Indian economy will catch up with China’s growth by 2016-17.
“According to our analysis, India will catch up with China’s growth in the year 2016 and 2017,” says World Bank chief economist and senior vice-president Kaushik Basu.
“In India, export growth has been robust, and investor confidence has been bolstered by election of a reform-minded government. The current account deficit and elevated inflation—both persistent vulnerabilities—have declined considerably. Over the medium term, growth is expected to rise steadily to 7% as reforms begin to yield productivity gains,” ,” the World Bank said in its flagship publication, Global Economic Prospects, released on January 13.
“This is expected to benefit other countries in the region which receive remittances from India,” the bank said.
The World Bank’s optimistic projection of the fortunes of the Indian economy has created much cheer in India. The bank’s assessment has been driven by the prospects of the fast-tracking of economic reforms under the Modi government, with the prime minister leading the charge. Since coming to power in May 2014, the Modi government has reignited the India growth story by going ahead with critical economic reforms like the increasing FDI caps in insurance and defence sectors. The reforms have enthused global investors and revived faith in the India story.
China, the world’s second largest economy, had recorded double-digit economic growth for almost three decades since the early eighties. The Chinese economy has, however, slowed down in recent years, with economists predicting that it will stabilize around 7 per cent over the next few years.
“China’s challenge is learning to live with a growth rate of around 7 per cent. 7 per cent growth for a country that has grown so well over a 30-year period is actually very good performance,” said Mr Basu.
With the Modi government armed with a comfortable majority in parliament, it has the political muscle to push through difficult but necessary second generation economic reforms, which, if executed, could lead to India surpassing the Chinese rate of growth over the long term.
In a recent speech before global investors at the Vibrant Gujarat summit, Mr Modi declared his resolve to make India the best place to do business.

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