Economic growth ‘meager’ in India
By Crystal Tsoi
WASHINGTON, DC: With the exception of Afghanistan, the economies in the South Asia region have been struggling for persistent and strong growth, bearing witness to either moderating or stagnating economies.
In a press event on Wednesday, Chief Economist of South Asia for the World Bank Martin Rama reported on the current state of the South Asian economies. The report, issued biannually, gave an insight on the overall outlook of the region as well as provided a breakdown of the economic components of the eight countries in the region (Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka).
A glimpse into the region’s health can perhaps be broadly seen through India, the region’s largest and most significant economy comprising 80 percent of the region’s GDP. The report, released as part of the World Bank’s 2013 Spring Meetings, hinted at a cautiously optimistic outlook for the future based on the lukewarm findings of the past period’s economic assessment.
The title of the report, “Regaining Momentum,” alluded to the large amount of work that still needs to be done on the economic policy side to sustain and reach the region’s full economic potential.
In India, particularly, the economic growth is meager and has failed to reach its pre-crisis real GDP growth rates. Currently, real GDP growth rate at market prices is projected at 4.7 percent for FY 2012/2013, compared to the actual growth rate of 6.3 percent in FY 2011/2012.
This pattern is prevalent throughout the region as well. Pakistan, the region’s second largest economy, is expected to have a 3.5 percent factor cost GDP growth rate compared to the actual 3.7 percent from last year.
Regionally, two important changes have accounted for this stable yet stagnant economy. In area of exports, external factors such as the previous global crisis and the eventual slowdown of growth has contributed to the patterns observed in the region. Additionally, political uncertainty in countries such as Maldives and India have spurred investment hesitation, one of the factors inhibiting the region from realizing its economic potential.
Though the report itself serves as an assessment and not prescriptive policy recommendation, Rama did offer an insight into the internal dynamics of the Indian economy and hinted that the troubles affecting it can be attributed more to domestic issues rather than international ones.
“I think the potential growth of India is very much associated with the change in demographic change [such as its] process of urbanization,” he said. “Jobs is key to transform demographic transition into growth.”
Additionally, Rama added that the uncertainty in Indian unemployment numbers along with a smaller women work force and truncated job creation efforts are indications that the Indian economy “may not be creating the best jobs to realize its potential.”
To contact the author, e-mail: crystaltsio@americanbazaaronline.com