The economy will grow 7.2% in 2017-18 and 7.7% in 2019-2020 and implementation of the goods and services tax (GST) will provide a big boost to overall economic growth and revenues, a World Bank report said on Monday.
According to Junaid Ahmad, World Bank country director in India, the GST would reduce the cost of doing business for firms, reduce logistics costs of moving goods across states, while ensuring no loss in equity.
“Low female labour force participation, however, remains a serious concern. Higher level of women participation in the economy can help propel India closer to double digit growth,” he said.
The Indian Development Update said that India’s economy was slowing down in early 2016-17, until the favourable monsoon started lifting the economy, but the recovery was temporarily disrupted by the government’s “demonetisation” initiative.
While limited data is available, demonetization may have had a disproportionate impact on poorer households, which are more likely to work in construction and informal retail, the report said, adding that despite this, there was a relatively modest slowdown in the economy.
The report attributes it to coping mechanisms (which included greater usage of digital transactions), higher rural incomes, and robust public consumption.