Faster reforms can give a boost to India growth story: World Bank

New Delhi: India’s potential economic growth might get a boost if government accelerates implementation of its ambitious reform agenda, World Bank said in a report that also outlined policy prescriptions for banking and infrastructure sectors.

“Addressing the followingmath of financial sector distress might unlock significant growth,” the multilateral lender said in its ‘Falling long-term growth prospects: trends, expectations, and policies’ report released Monday.

The report stressed on the need to improve efficiency and depth of banking sector. “Reforms might be undertaken to further rationalise the role of public sector banks, ensure a level-playing field in banking sector, and promote development of capital markets.”

On infrastructure, it suggested implementing reforms proposed by Task Force on National Infrastructure Pipeline, and improving contract enforcement, dispute resolution and financing.

“The steepest slowdown in investment growth over two decades to 2021 occurred in India,” the report noted. “Investment growth in India slowed from an annual average of 10.5% in 2000-10 to 5.7% in 2011-21.”

Structural bottlenecks have proved to be barriers to investment, it said.

For the South Asian region, it suggested that increasing female labour force participation might increase potential annual GDP growth by 1.2 percentage points between 2022 and 2030.For India, World Bank said, “restrictive labour laws limit employment opportunities for women and discourage the adoption of new technologies, thereby reducing productivity in manufacturing”. India’s female labour force participation increased marginally to 32.8% in 2021-22, government data showed.

India’s estimates of potential growth since 2010 have been 6-8% a year.

GLOBAL GROWTH CONCERNS

The World Bank has raised concerns that the maximum rate at which global economy can grow without sparking inflation will slump to a three-decade low by 2030. It expects average potential GDP growth to dip to 2.2% a year between 2022 and 2030, with growth rate in developing countries slowing down to 4% compared to 6% between 2000 and 2010.

“A lost decade might be in the making for the global economy,” said Indermit Gill, chief economist at World Bank.