Recent slowdown in Indian economy is temporary, will get back on track soon: World Bank

Amidst the hot topic of economic slowdown after the demonetization drive and rolling out of the Goods and Services Tax Bill (GST), World Bank’s take on economic slowdown might give some relief to the Prime Minister Narendra Modi led government.

World Bank President Jim Yong Kim said the current slowdown in India’s economic growth is an “aberration” caused by temporary disruptions in preparation for the GST and asserted that it will get corrected soon.

He also said that the GST would have long-term positive impact on the economy.

“There’s been a deceleration in the first quarter, but we think that’s mostly due to temporary disruptions in preparation for the GST, which by the way is going to have a hugely positive impact on the economy,” Kim told the media during a conference ahead of the annual meeting of the International Monetary Fund and the World Bank.

“We think that the recent slowdown is an aberration which will correct in the coming months, and the GDP growth will stabilise during the year. We’ve been watching carefully, as Prime Minister (Narendra) Modi has really worked on improving the business environment, and so, we think all of those efforts will pay off as well,” he added.

Further responding on India and human capital, Kim praised the commitment of Prime Minister Narendra Modi to sanitation issues, and said ‘Swachh Bharat’ is one of the most effective programmes anywhere.

“I know that Prime Minister Narendra Modi himself personally is very committed to improving opportunities for all of India. But, India has a lot of challenges. We look at some of the educational outcomes, we’ve looked at some of the health outcomes, and India has room to improve, like most other countries,” he said.

“Our job is to take the political will and commitment that Prime Minister Modi has clearly demonstrated and has communicated to everyone, and then bring to India the most effective intervention that will, as quickly as possible, improve the stock of human capital,” Kim said.

Finance Minister Arun Jaitley would be leading a delegation to the annual meeting next week.

India’s GDP grew 5.7% during the April-June period. During the previous quarter (January-March) the GDP had grown by 6.1%.