World Bank: Quick reforms implementation to spur India’s growth

NEW DELHI: India’s potential growth could benefit from accelerated implementation of an already ambitious reform agenda, the World Bank said in a new report that warns that the global economy faces the prospect of a “lost decade” on account of nearly all drivers of economic progress in recent history fading.

The report titled ‘Falling Long-Term Growth Prospects: Trends, Expectations, and Policies’ said the global economy’s ‘speed limit’ - the maximum rate of long-term growth without causing inflation is set to decline to its lowest point in three decades by 2030.

“In the decade before COVID-19, a global slowdown in productivity - which is essential for income growth and higher wages - was already adding to concerns about long-term economic prospects,” the report said.

The report further said, adding that investment growth is weakening, global labour force is growing sluggishly, human capital reversals have been triggered by the coronavirus pandemic, and growth in international trade is barely matching GDP growth.

“The result could be a lost decade in the making - not just for some countries or regions as has occurred in the past - but for the whole world. Without a big and broad policy push to rejuvenate it, the global average potential GDP growth rate... is expected to fall to a three-decade low of 2.2 per cent a year between now and 2030, down from 2.6 per cent in 2011-21,” it said.

The analysis shows global potential GDP growth can be boosted by as much as 0.7 percentage points - to an annual average rate of 2.9 per cent - if countries adopt sustainable, growth-oriented policies that would convert an expected slowdown into an acceleration of global potential GDP growth. While India has been growing at a faster pace than peers, its “growth could benefit from accelerated implementation of an already ambitious reform agenda,” it said.