World Bank Group Chief Economist Indermit Gill emphasizes the imperative for India to enhance private investment and carve out room for the private sector, given the necessity of leveraging domestic reforms to counter the repercussions of a global economic downturn. Gill notes that maintaining the previous year’s economic performance is challenging amid a global deceleration. The anticipated global growth rate of 2.4% in 2024, the slowest since the 2008 financial crisis, underscores the intensifying global headwinds.
Gill underscores the need for India to internalize the significant difference between a 3% and a 2.4% global growth rate. To overcome challenges posed by external adversities, he asserts that India must foster dynamism domestically, primarily by improving private investment. Regulatory measures, facilitating access to finance, and ensuring that the government doesn’t overshadow private enterprise are key factors in this endeavor.
Acknowledging India’s well-managed financial sector, Gill commends the country’s resilience in avoiding a crisis solely based on its financial nature. While there are emerging fiscal weaknesses, the maturity and terms of public debt have worked favorably for India. He credits the country’s strategic efforts over the past decade for its current financial stability.
The ‘Global Economic Prospects 2024’ report draws parallels between the present scenario and the investment boom in India during 1991-1994, driven by reforms in 1991. Gill expresses confidence in India’s potential to replicate the success of the 1990s. Despite the challenges posed by upcoming elections, Gill anticipates India’s ability to rebound after May, emphasizing the need for ambitious reforms that grant more freedom to individuals and companies.
In concluding, World Bank Chief Economist Gill advocates for reforms that transcend the mere alleviation of government involvement in markets. He emphasizes the necessity for India to set higher ambitions to fuel economic buoyancy and sustain a growth trajectory of 6% or more, ideally reaching 7% or beyond.
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