India’s economy is set for a modest recovery after a loss of momentum, as reforms in taxation, business regulations and steps to upgrade infrastructure start to bear fruit, the Organization for Economic Cooperation and Development (OECD) said in a report on Thursday.
The OECD economic survey of India said Asia’s third largest economy’s growth will slow down to 5.8% in 2019, but will recover to 6.2% in 2020, and 6.4% in 2021. India’s economy had expanded at 6.8% in FY19, as per official government data. In the June quarter, it expanded at 5% and in the September quarter, the slowdown deepened with a 4.5% expansion, the slowest pace since March 2013.
“Further reforms to modernize the economy are now needed to drive the creation of high-quality jobs, as well as measures to improve public services and welfare," said the report.
It said India has greatly expanded its participation in global trade in recent years, but private investment remained relatively weak and employment rate has declined amid a shortage of quality jobs. It also noted that rural incomes were stagnating.
OECD, however, called India a growth champion and a major player in the global economy.
“However, this slower pace of growth underlines the need to fully implement existing reforms and continue lowering barriers to trade to generate the investment and jobs India needs to raise living standards across the country," a statement from OECD said quoting chief economist Laurence Boone. The report was released in the capital in the presence of chief economic advisor in the finance ministry, Krishnamurthy Subramanian.