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World Bank projects bright Indian growth for 2016-17 amid weak global growth

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A World Bank report projects India’s growth at 7.8% in 2016-17 amid projected weak global growth at 2.95%

Washington: India, the dominant economy in the South Asian region, is projected to grow at a faster 7.8 percent in fiscal 2016-17 with growth in the region, speeding up to 7.3 percent in 2016 from 7 percent in the year just ended, a new World Bank report said on Wednesday.

Weak growth among major emerging markets with only the South Asia region, led by India, projected to be a bright spot, will weigh on global growth in 2016. But economic activity should still pick up modestly to a 2.9 percent pace, from 2.4 percent growth in 2015, as advanced economies gain speed, said the World Bank’s January 2016 Global Economic Prospects released here.

South Asia region is a net importer of oil and will benefit from lower global energy prices. At the same time, because of relatively low global integration, the region is shielded from growth fluctuations in other economies, the report said.

Simultaneous weakness in most major emerging markets is a concern for achieving the goals of poverty reduction and shared prosperity because those countries have been powerful contributors to global growth for the past decade, the bank said.

Spillovers from major emerging markets will constrain growth in developing countries and pose a threat to hard-won gains in raising people out of poverty, the report warned.

Global economic growth was less than expected in 2015, when falling commodity prices, flagging trade and capital flows, and episodes of financial volatility sapped economic activity.

Firmer growth ahead will depend on continued momentum in high income countries, the stabilization of commodity prices, and China’s gradual transition towards a more consumption and services-based growth model.

Developing economies are forecast to expand by 4.8 percent in 2016, less than expected earlier, but up from a post-crisis low of 4.3 percent in the year just ended.

Growth is projected to slow further in China, while Russia and Brazil are expected to remain in recession in 2016.

“There is greater divergence in performance among emerging economies. Compared to six months ago, the risks have increased, particularly those associated with the possibility of a disorderly slowdown in a major emerging economy,” said World Bank Group Vice President and Chief Economist Kaushik Basu.

“A combination of fiscal and central bank policies can be helpful in mitigating these risks and supporting growth.”

Although unlikely, a faster-than-expected slowdown in large emerging economies could have global repercussions, the report said.

Risks to the outlook also include financial stress around the US Federal Reserve tightening cycle and heightened geopolitical tensions, it said. (Arun Kumar, IANS) (Photo: www.odishanewsinsight.com)

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As per Assocham, the Indian economy may reach 7% in 2018

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As per Assocham, the Indian economy may reach 7% in 2018.
As per Assocham, the Indian economy may reach 7% in 2018. IANS
  • Because of demonitisation, the economy may reach 7% in 2018: Assocham
  • Inflation may range between 4-5.5 per cent towards the second half of the next calendar year
  • Assocham expects the forthcoming Union Budget to be “heavily tilted” towards the farmers

New Delhi, Dec 24, 2017: With government policies set to tilt more towards the “stress-ridden rural landscape” next year in the run-up to the 2019 Lok Sabha elections, the Indian economy may reach a 7 per cent growth in 2018 while recovering from the lingering effects of demonetisation and GST, industry chamber Assocham said on Sunday.

“After ‘disruptions’ from the lingering effects of demonetisation and GST roll-out, the Indian economy may reach a 7 per cent growth in 2018 with government policies tilting towards the stress-ridden rural landscape in the penultimate year before the Lok Sabha elections,” according to the industry body’s “Year-Ahead Outlook”.

“Against GDP growth of 6.3 per cent in the second quarter of 2017-18, the economic expansion may reach the crucial 7 per cent mark by the end of September 2018 quarter, while inflation may range between 4-5.5 per cent towards the second half of the next calendar year with the monsoon being a key imponderable,” it said.

Assocham President Sandeep Jajodia said the projections were based on the assumption of stability in government policies, good monsoons, pick-up in industrial activity and credit growth as also stability in the foreign exchange rates.

“The worries on account of crude oil shooting up are likely to abate, if there are no fresh geo-political shockers.”

According to the Assocham outlook, while the underlying bullish sentiment should continue to prevail in the Indian stock market in 2018, the returns on equity may not be as robust as in 2017.

“This is because the 2017 bull run has already factored in the return of growth steadiness in 2018 and the corporate earnings witnessing a pick-up,” it said.

The industry lobby said in the run-up to state assembly elections in several politically important states, the political economy is set to tilt towards the farm sector “which has been witnessing some stress”.

“The stress in the agriculture sector is traceable to lack of reforms in the rural economy. Despite political promises, several of the states have not been able to reform the APMC Act, which restricts farmers to sell their produce to a particular set of cartels.”

Assocham expects the forthcoming Union Budget to be “heavily tilted” towards the farmers while the industrial focus would be on sectors which create jobs.

“A realisation seems to be dawning that growth per se is not enough, the benefits must be seen in the form of higher employment. The year 2018 would see policies in this direction”, the statement added. (IANS)

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