India will remain the fastest growing economy in the world at 7.2 per cent in 2017-18 on the back of reforms, domestic consumption and improvement in trade, the World Bank on Monday said.
In its May 2017 India Development Update. It suggested that a higher level of women participation in the economy can help propel the country closer to a double digit growth.
There were signs of a slowdown in early part of last fiscal but a favourable monsoon lifted the economy before being temporarily hit due to demonetisation in November 2016. Demonetisation caused an immediate cash crunch. As a result, a modest slowdown is expected in Gross Domestic Product (GDP) growth in 2016-17 to 6.8 per cent, World Bank Country Director Junaid Ahmad said.
In 2016-17 too, the World Bank had noted that India remained the fastest growing economy in the world with strong economic fundamentals and ongoing reform momentum.
“Growth is expected to recover in 2017-18 to 7.2 per cent and is projected to gradually increase to 7.7 per cent in 2019-20,” the report said.
A higher economic growth by 2019-20 is underpinned by recovery in private investments, which are crowded-in by the recent increase in public capital expenditure and improvement in investment climate, said the report.
Ahmad said: “India remains the fastest growing economy in the world and it will get a boost from its approach to GST which will reduce the cost of doing business for firms, reduce logistics cost of moving goods across states, while ensuring no loss in equity.”
Overall the impact of GST on equity and poverty is likely to be positive, Ahmad said.