Adi Godrej, Chairman of the Godrej Group, on Wednesday welcomed World Bank’s 7.3% growth projection. (Image: Reuters)

Adi Godrej, Chairman of the Godrej Group, on Wednesday welcomed World Bank’s 7.3% growth projection, saying that the right policy environment aided by transformative reforms will drive the economic growth. The World Bank is estimating India’s economy to grow by 6.7% during the current fiscal year, higher than the 6.5% estimate by the Indian government.

The Gross Domestic Product (GDP) growth is expected to rise to 7.3% in 2018-19, making India again the world’s fastest growing economy, according to the World Bank’s Global Economic Prospects report released on Tuesday. However, report dropped the growth estimate for 2017-18 by 0.1 per cent from its projection June 2017, because of the disruptions to the economy from the Goods and Services Tax (GST).

Adi Godrej said that the transformative reforms may cause some pain for businesses and the overall economy in the short term period. However, the medium to long-term economic growth depends on the introduction, execution and ultimate success of these transformative reforms.

The World Bank saw benefits down the road from GST. “Over the medium term, the GST is expected to benefit economic activity and fiscal sustainability by reducing the cost of complying with multiple state tax systems, drawing informal activity into the formal sector, and expanding the tax base,” the report said.

The Bank put the growth estimate for China’s economy for 2017 at 6.8 per cent and forecast 6.4 per cent increase in 2018. In its overview, the Bank said it finally saw the world economy recovering from the financial crisis that hit the world with full force in 2011.

It said, “2018 is on track to be the first year since the financial crisis that the global economy will be operating at or near full capacity.” The report forecast the global growth rate to edge up to 3.1 per cent in 2018 after “a much stronger-than-expected” 2017 growth of three per cent in 2017. “The broad-based recovery in global growth is encouraging, but this is no time for complacency,” World Bank Group President Jim Yong Kim said in a statement. “This is a great opportunity to invest in human and physical capital.”

India’s Ministry of Statistics and Programme Implementation reported last week that it estimated the GDP to grow by only 6.5 per cent in 2017-18 compared to 7.1 per cent in 2016-17. The World Bank estimate is in line with the International Monetary Fund’s (IMF) projection of 6.7 per cent for 2017. The IMF, however, forecast a slightly higher growth estimate of 7.4 per cent for 2018.

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