Due to the slow progress in execution of reform policies, United Nations has reduced its GDP growth forecast for India for 2016 to 7.5% from 8.2%.
- According to a report by United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), the potential for even higher economic growth in some other major economies in the region has been held back due to slow progress in implementing reform policies.
- As per ESCAP economists, China’s growth also downgraded to 6.5% in 2016 from 6.8% estimated earlier.
Highlights in lieu of Indian Growth:
The main reason for the demotion of Indian growth forecast is the delays in implementation of reform policies proposed by the new administration.
- Indian Govt has eased norms on FDI and introduced online services to enhance the business environment but there have been delays in instituting some major reforms which had been expected.
- Policies include reform of land acquisition, labour laws and establishment of a nationwide goods and services tax, which were not enacted due to legislative hurdles and opposition from sections of the public.
- Implementation of such reforms can accelerate growth in India.
- Despite expectations of expedient implementation by new administrations, India has already undertaken a number of significant economic reforms.
- Indian government had considerable success in improving financial inclusion, which will help to spur domestic consumption.
Meanwhile, the government recently lowered its economic growth forecast for 2015-16 to 7-7.5% from 8.1-8.5%.