Potential growth drivers
- Technology, gains in Education and Ease of doing business due to less red tape
- Goldman Sachs said these drivers could contribute 3.6 percentage points to GDP growth annually
- In a faster reform scenario, India's potential growth could rise to 9% over due to reforms in labour, infrastructure and education
New Delhi, September 14
India is likely to become the fastest-growing emerging market this year and its potential growth could rise to 8% over the next five years driven by Technology, gains in Education and Ease of doing business due to less red tape, Goldman Sachs said today.
Terming these three factors as TEE's, the global brokerage firm said these could be the key drivers of growth and can contribute 3.6 percentage points to GDP growth annually.
"We forecast India's potential growth could rise to 8% over the period FY16-20 from 7% in FY12-15, under the new GDP series, based on bottom-up factors and structural reforms," it said.
Moreover, in a faster reform scenario, India's potential growth could rise to 9% over this period due to reforms in labour, infrastructure and education, it said.
"With the government focusing its efforts on improving the business climate, we think micro conditions could see an improvement in contribution to GDP growth over the period," Goldman Sachs Chief India Economist Tushar Poddar said in the research note.
The areas in ease of doing business where the brokerage expects some improvement are "dealing with construction permits", "getting electricity", and "registering property" due to a big push by the government to move these permits online, as well as "resolving insolvency" due to a new bankruptcy code, expected in FY16, Poddar added.
The report further said it has taken more time in India for each factor of productivity to affect the economy, while in China, every variable has had a faster impact.
Urbanisation has contributed to growth twice as fast in China compared to India, and in agricultural productivity it was three times as fast.
Goldman Sachs said by 2020, India's economy could gain over 300 million more internet users and 50 million more high-school graduates. It is already adding 200 thousand bank accounts every day, and nearly 800 government services have moved online, reducing red tape.
"These changes can allow the economy to leapfrog a generation of creating physical infrastructure in retail, banking, and government services, and lead to a jump in productivity," the report said.
- Technology, gains in Education and Ease of doing business due to less red tape
- Goldman Sachs said these drivers could contribute 3.6 percentage points to GDP growth annually
- In a faster reform scenario, India's potential growth could rise to 9% over due to reforms in labour, infrastructure and education
New Delhi, September 14
India is likely to become the fastest-growing emerging market this year and its potential growth could rise to 8% over the next five years driven by Technology, gains in Education and Ease of doing business due to less red tape, Goldman Sachs said today.
Terming these three factors as TEE's, the global brokerage firm said these could be the key drivers of growth and can contribute 3.6 percentage points to GDP growth annually.
"We forecast India's potential growth could rise to 8% over the period FY16-20 from 7% in FY12-15, under the new GDP series, based on bottom-up factors and structural reforms," it said.
Moreover, in a faster reform scenario, India's potential growth could rise to 9% over this period due to reforms in labour, infrastructure and education, it said.
"With the government focusing its efforts on improving the business climate, we think micro conditions could see an improvement in contribution to GDP growth over the period," Goldman Sachs Chief India Economist Tushar Poddar said in the research note.
The areas in ease of doing business where the brokerage expects some improvement are "dealing with construction permits", "getting electricity", and "registering property" due to a big push by the government to move these permits online, as well as "resolving insolvency" due to a new bankruptcy code, expected in FY16, Poddar added.
The report further said it has taken more time in India for each factor of productivity to affect the economy, while in China, every variable has had a faster impact.
Urbanisation has contributed to growth twice as fast in China compared to India, and in agricultural productivity it was three times as fast.
Goldman Sachs said by 2020, India's economy could gain over 300 million more internet users and 50 million more high-school graduates. It is already adding 200 thousand bank accounts every day, and nearly 800 government services have moved online, reducing red tape.
"These changes can allow the economy to leapfrog a generation of creating physical infrastructure in retail, banking, and government services, and lead to a jump in productivity," the report said.
