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End of fiscal fear mongering? United Nations predicts 7.6% growth for Indian Economy in 2018-2019

The United Nations in its report ‘UN World Economic Situation and Prospects’ (WESP), said GDP growth in India is expected to climb to 7.5 and 7.6 percent in fiscal years 2017-18 and 2018-19 respectively. It also said that the economy has substantially recovered from the 6.7 percent growth India registered in the fiscal year 2017.

The reports said that India remained as the fastest growing economy in the world with 7.6 percent of growth due to the robust private consumption and the reforms taken by the present government. The report praised the present government for taking bold reforms and cautioned about the decreasing private investment. It added that there is a revival in capital spending in the economy as the private consumption is increasing.

The economy of China will be stable, with a moderate growth of 6.9 percent in 2017 to 6.5 percent in 2018 and 6.3 percent in 2019. China is making structural reforms to its economy but expected to remain solid, supported by robust consumer spending and supportive fiscal policies.

The report added that growth in the world economy is surpassing expectations and global GDP is now expected to expand by more than three percent this year and in 2019, reflecting strong growth in developed countries and broadly favourable investment conditions.

However, increased tensions regarding globalization and trade with uncertainties over monetary policies could create a challenge to the world economy. It also said that the increasing level of debt and greater geopolitical tensions may thwart the progress towards continuous growth. World Economy is projected to grow at 3.2 percent in 2018 and 2019.

The macroeconomic outlook in South Asia remains favourable, amid robust domestic demand, strong infrastructure investment and moderately accommodative monetary policies. GDP growth in the region is expected to strengthen to 6.6 percent in 2018 and 6.8 percent in 2019, following an expansion of 6.0 percent in 2017.

The report added that there is a growth in world trade, reflecting a widespread increase in global demand. The prices of the global commodity are slightly rising, which could exert some pressure on inflation in many developing countries, the report said.

This is not the first time that an international forum has praised India’s efforts in increasing its growth rate. Recently,the IMF had pegged India’s growth rate at 7.4 percent in 2018 and also praised its structural reforms. Similarly, rating agencies like Moody’s had backed Modi government and upgraded its sovereign rating first time in 14 years. The World Bank had also projected a strong growth under the leadership of Modi. India has jumped 30 places in Ease of Doing Business ranking. Micheal Dell had said, he was inspired by India’s growth story and Bill Gates had lauded Modi’s Aadhar scheme and said that he has funded the World Bank to take the Aadhar to other countries as well.

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