The 2018 Global Economics Prospect (GEP) released by the World Bank projects India's GDP growth to pick up to 7.3% in 2018-19 and to 7.5% for the next two years.
In comparison, the figure for the second quarter of the current financial year (July-September 2017) was 6.3%, up from the three-year low of 5.7% in the first quarter.
The report pegs overall economic growth for 2017 at 6.7%, despite initial setbacks from demonetisation and introduction of the Goods and Services Tax (GST).
"In all likelihood, India is going to register higher growth rate than other major emerging market economies in the next decade. So, I wouldn't focus on the short-term numbers. I would look at the big picture for India and big picture is telling us that it has enormous potential," Ayhan Kose, director, Development Prospects Group, World Bank, and the author of the report said.
According to the report, India's future is looking good on several fronts. Strong private consumption and services are expected to continue to support economic activity. Private investment is expected to revive as the corporate sector adjusts to the GST, which over the medium term is expected to benefit economic activity and fiscal sustainability by reducing the cost of complying with multiple state tax systems, drawing informal activity into the formal sector, and expanding the tax base.
Moreover, the recent recapitalization package for public sector banks announced by the government is expected to help resolve banking sector balance sheets, support credit to the private sector, and lift investment, while the global trade recovery is expected to lift exports.
The World Bank projections look good even in comparison with China. In 2017, China grew at 6.8 per cent, 0.1 per cent more than that of India, while in 2018, its growth rate is projected at 6.4 per cent. And in the next two years, the country’s growth rate will drop marginally to 6.3 and 6.2 per cent, respectively.