India's economy is expected to grow at 7.2 per cent in the current fiscal and the pace is expected to grow to 7.7 per cent by 2019-20 helped by a continuing process of reforms, improvement in investment climate and strong fundamentals, says the World Bank's India Development Report released on Monday.
The World Bank report bases its projections on an increase in private sector activity resulting from government's supportive measures.
''Economic activity ought to accelerate at 7.2 per cent in 2017-18 from 6.8 per cent in 2016-17. Growth increases gradually to 7.7 per cent by 2019-20, underpinned by recovery in private investments,'' said the report.
And despite the slight disruption caused by the government's decision to demonetize a major chunk of the currency in circulation in November last year, the report noted that India remains the fastest growing major economy.
''India remains the fastest growing economy in the world and it will get a boost from 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,'' said Junaid Ahmad, World Bank country director in India.
''India's economy was slowing down in early 2016-17, until the favourable monsoon started lifting the economy, but the recovery was temporarily disrupted by the government's 'demonetisation' initiative,'' it said in its India Development Update.
On the subject of declining female participation in jobs, Ahmad said that the rising incomes allow more women to stay at home. ''The evidence, however, shows that fewer jobs in agriculture have not been replaced by alternative jobs considered suitable for women.''
Senior country economist and the main author of the India Development Update, Frederico Gil Sander, said, ''India's female labour force participation rate is uniquely low for all levels of education.'' He said 65 per cent of Indian women with college degrees are not working. It is 41 per cent in Bangladesh.
Only 27 per cent of women of 15 years or older are working or actively looking for jobs in India, the report noted. Three out of every five prime working age Indian women (26-45 years) are not economically active, meaning that they are neither working on a farm or in businesses nor are they earning any wage.
Even among countries with similar income levels, India is at the bottom at 120th among 131 countries, the report said. The other countries are Yemen, Pakistan and Egypt.
The report suggests that the government create safe, flexible and well-paying jobs for a large number of women who are currently not in the labour market.
The report comes ahead of the release of provisional estimates of national income for 2016-17 by the Central Statistics Office (CSO) on 31 May. The CSO, in its advance estimates, had pegged GDP growth at 7.1 per cent in 2016-17.
The World Bank had in January scaled down India's growth forecast to 7 per cent for 2016-17 and had estimated growth to rebound in 2017-18 to 7.6 per cent.
However, it expects the economy to recover gradually and growth to increase to 7.7 per cent in 2019-2020.
According to the report, reforms such as the insolvency code and measures to deal with bad loans of public sector banks, including promulgation of the new ordinance, will also be crucial to enhance growth.
It expects inflation and external conditions to remain stable this fiscal.
The World Bank highlighted issues of weak private investments, low credit growth and rising anti-trade rhetoric globally as challenges to growth.
The report also stressed that job creation, especially for women, should be the next focus for the government after GST, which can boost growth into double digits.