India is showing strong signs of recovery amid weakness elsewhere in the world, the Organisation for Economic Cooperation and Development (OECD) said in its growth outlook on Wednesday, a day after the International Monetary Fund (IMF) and World Bank announced better growth prospects for India.
The World Bank had said India was benefiting from a “Narendra Modi dividend”.
India has rebounded swiftly after the global economic crisis, but is experiencing a slowdown in economic growth since 2012. But it is the only major economy where the OECD sees a pick-up in growth momentum in the next 6-9 months.
In the euro zone, signs are emerging of a loss of growth momentum in Germany showing a loss in momentum and Italy a weakening momentum; growth momentum is stable in France as well as the US, UK, Brazil, China and Russia elsewhere in the world.
According to OECD, “India needs to address its infrastructure shortfalls, pervasive state control in business activities, and unequal access to quality education” to maintain robust growth.
It also needs to reconsider “overly stringent labour regulations” which hinder job creation in the formal sector and leave workers with no formal labour contract and social security coverage.
OECD’s growth outlook is based on composite leading indicators (CLIs), which are calculated monthly and are designed to anticipate turning points in economic activity 6-9 months before they happen.
These are economic indicators whose ups and downs are similar to the business cycle of the economy and include market indicators, business confidence surveys and data on key industry sectors.