India's economic-slowdown an "aberration"; GST, a huge positive: World Bank
The World Bank said the recent Indian economic slowdown is an "aberration" due to temporary disruptions in the run-up to Goods and Services Tax, adding it will be rectified soon. World Bank President Jim Yong Kim stated GST would have a "hugely positive impact". This comes ahead of the annual IMF-World Bank meeting in Washington DC to be attended by Arun Jaitley-led Indian delegation.
Speaking of India's growth slowdown in the first quarter, World Bank President Kim insisted that the deceleration was only temporary as GDP growth would stabilize in the coming months. Several economists and the opposition attributed the slowdown to demonetization and GST. India's GDP growth on a year-on-year basis during Q1 (April-June period) was 5.7% compared to 7.9% in the same period last year.
Kim said the global economy and trade started to accelerate following years of disappointing growth, but investment remains weak. He said, "We are concerned that downside risks such as a rise in protectionism, policy uncertainty, or possible financial market turbulence could derail this fragile recovery."
International Monetary Fund and World Bank would soon release new GDP figures and growth-projections for India and other countries. However, Kim asserted countries aren't investing enough in their people; there's a need to improve healthcare and educational systems. He added investing in people boosts economic growth, but many still undervalue such contribution of human capital built through healthcare, quality education, jobs, and skills.
Jim Yong Kim stated: "Countries need to continue to advance their reform agenda; they need to invest in people. They need to build resilience against overlapping challenges, including the effects of climate change, natural disasters, as well as conflict, forced displacement, famine, and disease."
World Bank is ready with new insights on improving health/education outcomes to help nations with financing, technical knowledge, and direct support for implementation. It would lead to equality of opportunity, which is the Bank's central focus. It's going to release a new report in a series on 'The Changing Wealth of Nations'. In a first, human capital has been added to its wealth analysis.
Speaking about India and human capital, Kim said PM had made a huge commitment to sanitation issues in the country through "Swachh Bharat" which is one of the "most effective programmes" in the world. Modi is committed to improving opportunities, but the country faces a lot of challenges. He added like most nations, India has room to improve the educational and health outcomes.
Kim said: "Our job is to take the political will and commitment that Prime Minister Modi has clearly demonstrated and has communicated to everyone, and then bring to India the most effective intervention that will, as quickly as possible, improve the stock of human capital."
