According to ADB Chief Economist Albert Park, India must prioritize reforms in its factor markets such as land and labor to propel its growth towards a double-digit trajectory.
Park emphasized the need to formalize basic factor markets like land and labor in India's formal sector to address concerns regarding their size and unemployment.
These reforms encompass various critical factors for production, including land, labor, energy, and access to credit.
While labor reforms were approved by Parliament in 2020, their implementation remains pending. Central labor laws from 2019 and 2020 were consolidated into four labor codes, covering wages, industrial relations, social security, and occupational safety. However, the framing of rules under these codes requires action from both the central and state governments.
Park suggested additional reforms, such as regulatory ease, improvement in the ease of doing business, and tariff deregulation, to enhance India's participation in the global value chain.
The government aims to achieve USD 2 trillion in exports of goods and services by 2030, requiring substantial growth from the current estimated USD 770 billion in combined exports.
Integration into global value chains is essential for increasing goods exports, with a focus on specializing in production stages where India holds a comparative advantage.
Park stressed the importance of investing in human capital to address poor learning outcomes compared to more successful economies.
To attain double-digit growth, Park highlighted the need for significant investment in infrastructure and adoption of global frontier technologies to boost efficiency and productivity.
The Asian Development Bank raised India's GDP growth forecast for the current fiscal to 7 percent, attributing it to public and private sector investment and improvements in consumer demand. ADB projects India's growth at 7.2 percent for the 2025-26 fiscal year.
While ADB's growth forecast aligns with the Reserve Bank of India's projections, it is slightly lower than the estimated GDP expansion of 7.6 percent in 2022-23.
The RBI anticipates a 7 percent GDP growth in the current fiscal year, citing expectations of a normal monsoon, easing inflationary pressures, and sustained momentum in manufacturing and services sector.
Follow us
