A new year always brings fresh hope not only for individuals, but also for the country. And as we celebrate India’s Republic Day on January 26, NB Rao tells us what’s in store for the country’s economy in the coming months
As the new year begins, it comes as good news that after pipping France in 2018, India is all set to overtake the United Kingdom in 2019, to emerge as the world’s fifth-largest economy. This was revealed recently by a study conducted by the international research organisation PwC, which is predicting that the Indian economy will grow by 7.6 per cent. At a time when there is a sharp slowdown in business activity in the US and Europe, the only major economy that continues to witness rapid growth is India’s. The International Monetary Fund (IMF) too has forecasted a growth rate of 7.4 per cent for the country in 2019. “India’s growth is expected to increase to 7.4 per cent in 2019, up from 6.7 per cent in 2017,” the IMF said in its latest World Economic Outlook report.
The World Bank has forecast a growth rate of 7.5 per cent in the 2019-20 fiscal for the country as well. Senior executives of the World Bank confirmed recently that India retains the tag of being the fastest-growing major economy. “India’s economy is robust, resilient and has the potential to deliver sustained growth,” Ayhan Kose, director, Development Prospects Group, World Bank, told a news agency recently.
Global economists and policy makers are confident that India will continue at the sevenplus per cent rate over the next few years. And over the next 12 years, India is expected to overtake leading nations, including Japan and Germany, to emerge as the third-largest economy after the US and China.
More importantly, NITI Aayog – the National Institution for Transforming India, a government think-tank, estimates that the country’s economy will grow at a vibrant eight per cent annually over the next 15 years and the GDP could cross the USD 8 trillion-mark. This remarkable pace of growth in India is having a huge positive impact on the financial services sector, especially banking, housing finance and mutual funds.
Banks play a crucial role in the Indian economy. They boost growth, ensure adequate supply of funds for industries and entrepreneurs, and also encourage the agriculture and allied sectors to prosper. Housing finance companies also play a major role in ensuring that millions of Indians in need of a house are funded. This makes life easy for the common man. Mutual funds, too, are an investment tool for the common man. DP Singh, executive director and chief marketing officer (domestic business), SBI Mutual Fund, points out that many people are shifting their money from bank deposits to mutual funds in India. “About two-and-a-half years ago, mutual funds accounted for just 10 per cent of bank deposits,” he said, adding, “Now it has gone up to 23 per cent.”
Indeed, the remarkable expansion of sectors including banking, housing finance and mutual funds reflect the vibrancy and growth potential of the Indian financial services sector in the coming years.
The author is a senor journalist and the views expressed in this article are his own