World Bank alarm

The World Bank’s growth forecast for India lacks surprise element. With the prediction of a good monsoon this season, the country may even surpass its estimate of 7.3 per cent in the current financial year. IMF’s growth forecast for the country was a notch higher at 7.4 per cent. Finance Minister Arun Jaitley had sounded extremely positive in his Budget speech when he said, “We are now firmly on course to achieve high growth of 8 per cent plus”. The economy actually grew at 7.2 per cent in the third quarter last year, the fastest growth in five quarters; thanks to the waning of the effects of demonetisation and GST. Now, the economy seems to be poised to gain acceleration every quarter. But, we are still away from total recovery after the twin disruptions. Let us not forget that the country was growing at the rate of 8.2 per cent in the year that preceded the demonetisation bump.

The good tiding is, however, not without concerns. There is an apprehension that crude oil prices, which is heading north, may spike further due to geopolitical reasons, particularly the Syrian crisis. Rising prices of petrol and diesel have already started pinching the common man. Any further hike in the fuel rates could force the government to stray from its fiscal consolidation road map. A lot will also depend on the government’s control over the political temptations to announce populist measures ahead of the general election next year.

The biggest and real threat is jobless growth, which has also been underscored by the World Bank in its biannual South Asia Economic Focus report. According to the report, India would be required to grow at the rate of 18 per cent per annum to absorb its bourgeoning workforce. This is a daunting task. The informal sector, the backbone of the Indian economy, had been the worst hit by the twin disruptions that reduced the self employed into job seekers. Now, the time has come to test the efficacy of programmes like Skill India, Standup India and Startup India. The government must give policy impetus to investments for job creation.