Investment Boost, Labor Output Key to India's Growth, Says Citi
India needs to accelerate investment growth and improve productivity of its labor to ensure an 8% GDP growth.
(Bloomberg) -- India needs to accelerate investment growth and improve productivity of its labor to ensure its economy expands at a sustained 8 percent pace, Citigroup said in a report.
The $2.3 trillion economy needs to create jobs, reduce income inequality and reform its legal system to ensure faster growth and avoid social strife, the report titled, Securing India’s Growth Over the Next Decade, said.
"The inability to create jobs in an age of automation could potentially destabilize the social fabric," Citi analysts led by Samiran Chakraborty said in the report.
Asia’s third biggest economy is seen growing at its slowest pace in the year through March since Prime Minister Narendra Modi came to power in 2014. A surprise cash ban and a new sales tax have caused disruptions to businesses and job creation lagging GDP growth could hurt the ruling party’s popularity ahead of key state polls this year and the national election in 2019.
India’s pace of growth can significantly get hampered if a minority government comes to power after federal polls, the report said.
To contact the reporter on this story: Vrishti Beniwal in New Delhi at vbeniwal1@bloomberg.net.
To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Unni Krishnan, Karthikeyan Sundaram
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