- Thursday, February 27, 2025
India, which recently became the world’s most populous nation, aspires to become a developed nation fast, banking on the unprecedented demographic dividend.
By: Shubham Ghosh
THE Indian economy is set to grow at a solid pace for the remaining part of the current fiscal but quite below the potential rate, a Reuters poll of economists held this month said.
They also said that the country’s employment situation will improve only slightly.
India, which recently became the world’s most populous nation overtaking its northern neighbour China, aspires to become a developed nation fast, banking on the unprecedented demographic dividend, which seeks an annual gross domestic product growth rate of around eight per cent for the next two decades and half.
However, the success of the mission depends on implementing important reforms in areas such as education, infrastructure, healthcare and technology.
“If we want to realize that 8% growth potential this decade…the biggest challenge before policymakers is to reallocate the surplus labour from agriculture to more productive sectors with gainful jobs in them,” Dhiraj Nim, economist at ANZ Research, was quoted as saying by the publication.
“If India’s reform momentum is lacklustre, a less exciting picture is on the cards.”
The poll including 53 economists was carried out between July 13 and 21 and it revealed that the Indian economy would grow at 6.1 per cent rate in the current fiscal year — a respectable rate at a time when other major economies are expected to slow down — maintaining a favourable climate for creation of jobs.
As per the forecast, the Indian economy was predicted to grow 6.5 per cent in the next fiscal, with expectations of 6.2 per cent growth in the current quarter, followed by six per cent and 5.5 per cent.
The findings were largely unchanged from the poll undertaken in June.
“I think 6.0% to 6.5% is a very achievable and a very conservative forecast for India’s growth trajectory,” Nim was quoted as saying.
Recently, World Bank president Ajay Banga said generation of jobs is key to the South Asian economy’s growth story as he outlined the opportunity to make use of the “China Plus One” strategy — a scheme by many firms to build manufacturing units outside China.
Between 17 and 25 economists surveyed said the employment situation in India will change only slightly over the coming year.
“The unemployment situation hasn’t improved yet…and the skilling to some extent is also missing. So, there is a gap in terms of the demand versus the supply,” Radhika Piplani, chief economist at DAM Capital Advisors, told Reuters.
Twenty-one to 27 economists said the Production-Linked Incentive (PLI) scheme, which is designed by the Narendra Modi government to lure foreign manufacturers to build factories in India, would increase the country’s GDP in the current fiscal year only modestly.
Six said the PLI scheme, which allocated billions of Indian rupees as incentives from the current fiscal’s budget, will have zero impact.
Some economists said the PLI scheme is a move in the right direction, adding more economic reforms could help the scheme’s prospects and create millions of employment opportunities.
“Manufacturing needs to see strong growth and that is possible only when we…iron out the issues that are preventing fresh investments in the sector,” Suman Chowdhury, chief economist at Acuite Ratings and Research, was quoted as saying by Reuters.
