India's fast-growing economic growth rate will enable it to become the fourth-largest economy of the world by 2022, surpassing Germany, according to an analysis of International Monetary Fund's (IMF) projections by news agency Bloomberg. In the process, Britain will be out of the world's top-five economies.
However, India would have to overcome challenges in its journey of high-growth in the next few years, such as revamping of the taxation system, attracting investments in infrastructure and address the problem of rising bad loans in the banking system in order to reach that stage.
Equally significant is the productivity level that has actually fallen over the years, the agency said. The decline in labour productivity per person employed from 10 percent in 2010 to 4.8 percent in 2016 needs to be put in perspective globally; the output per worker is projected at $3,962 for India in 2017 when compared to Germany's $83,385, according to the International Labour Organisation, Bloomberg said.
In a related development, the IMF said that the implementation of the Goods and Services Tax (GST) will lift India's economic growth rate substantially.
"We expect that the goods and services tax (GST), which is targeted to be applied starting in July, will help raise India's medium-term growth to above eight per cent, as it will enhance production and the movement of goods and services across Indian states," Tao Zhang, deputy managing director of the IMF, told news agency PTI.
The IMF's growth projection for India is 7.2 percent for 2017-18 and 7.7 percent for 2018-19.
