- India's economy grew at 7.5%, outpacing US and China, he says
- Structural reforms and infrastructure investments key drivers of this
- Logistics costs remain high but improvements have have had positive impact
India's economy has defied global expectations, clocking a robust 7.5% growth rate, outpacing both the United States and China, according to World Bank President Ajay Banga. In an exclusive interview with NDTV's Gaurie Dwivedi, Banga highlighted the country's structural reforms and infrastructure investments as key drivers of its accelerating momentum.
"The world economy is better than people thought in the last year, year and a half," Banga said. "And I think part of that is the US is better than people expected. But the other two countries that did better than the math that was done earlier were India and China. And India had the highest growth rate of any of those three at 7.5%."
Banga praised India's strides in infrastructure, particularly logistics. "More needs to be done, but don't discount the impact of what has been done. There's work to be done on smoothing the flow of logistics, bringing down the cost as a percentage," he said. He noted that while some peg logistics costs at 14% of GDP, "some have calculated that the 14 is not right... but yes, it is still in double digits. It needs to come down to the high single digits to be truly competitive as a base."
Addressing India's demographic advantage, Banga emphasized the need for investment in human capital. "You have the raw talent. You have the numbers. Can we convert that talent and numbers into a productive workforce that powers India's growth? You can't do that without both education and health care. They have to be delivered together."
On reforms, Banga singled out the Goods and Services Tax (GST) as a personal milestone. "Originally, it was GST. I'm just delighted it happened because I faced it personally. I think you have to give a lot of credit to your late finance minister at that time who drove it deadly," he said, referring to Arun Jaitley. "But subsequently, the support from the party and from the PM and from other parties as well... You couldn't have got that through without a commonality of interest."
Banga also called for deeper reforms in land and labor, simplifying business operations. "The simpler you can make it... If it takes you 100 permits to open a hotel, that's a pain. If it takes you 20, which still covers what you need... the quicker off you are."
Pushing for digitisation and investor-friendly policies, he said, "Signing the Sovereign Investor Dispute Treaty would be amazing... These are not boundary shots. But each of them, it's the singles and twos in a T20 game that allow you to play the boundary shots at the end."
