India’s slowdown easing, says OECD

INDIA’S economy was coming out of its worst slowdown in a quarter century, but needed major structural reforms if it was to return to pre-2011 growth levels, the Organisation for Economic Co-operation and Development (OECD) said yesterday.

The OECD said in its India Economic Survey that annual growth should top 6.5 percent in the coming years, but reducing barriers to manufacturing growth was “critical”.

India’s growth has languished at below 5 percent for the last two financial years, hit by high inter- est rates, stubborn inflation and weak investment.

The OECD report called for a “simpler and more flexible labour law, covering more workers, coupled with better education and training programmes”.

India’s economy grew by 4.7 percent in the last fiscal year to March this year and the central bank projects 5.5 percent expansion this year.

“Structural reforms would raise India’s economic growth,” the report said.

“In their absence, however, growth will remain below the 8 percent growth achieved during the previous decade.”

Economists say India needs near double-digit economic growth to generate jobs for millions of young people who join the job market each year.

Right-wing Prime Minister Narendra Modi, whose Hindu nationalist Bharatiya Janata Party government was elected to power in May, has already taken some action to chop away at India’s thicket of regulations, seen by economists as discouraging crucial investment.

But the report said the government needed to do more to simplify India’s infamous bureaucratic red tape to speed up commissioning of industrial projects and other investment. – Sapa-AFP