India is on course to overtake China to claim the position as the world’s fastest growing, big economy in the next two years, the World Bank said Tuesday, the latest vote of confidence in the roadmap set out by the new leaders of the South Asian nation to revamp the economy.
The Washington-based development institution raised its forecasts for India, saying growth in Asia’s third-largest economy would accelerate in the coming years even as much of the world is slowing down. The reason? New Delhi is implementing changes that will make the country’s economy more efficient and vibrant.
Prime Minister Narendra Modi took office in May after his party won a rare majority in Parliament on a campaign promising smaller government and bigger growth. Since taking office, he has unveiled ambitious plans to change how India’s economy is managed.
“After several years of stalled progress, the newly-elected government has begun to implement measures to cut red tape, raise infrastructure investment, deregulate key parts of the economy, and shrink the role of government,” the World Bank said in its “Global Economic Prospects“ report released Tuesday. “Implementation stepped up during the fourth quarter, with the opening up of the coal industry to private investors, a deregulation of diesel prices to reduce the fiscal subsidy bill, a relaxation of labor market laws, and a linking of cash transfers with efforts to increase financial inclusion” were all cited by the report as helping in India’s progress towards supercharged growth.
While China has held the title as hardest-hitting heavyweight economy for years, it has been suffering through a slowdown and may have to give up the belt in 2017, according to World Bank projections in the report.