World Economic Forum 2018: India economic growth: Outlook and restrictions

World
Europe

Modi is the first Indian prime minister to visit Davos in 20 years. And he's bringing over a hundred delegates with him. Fortune magazine predicts India will overtake the UK and France to become the world's fifth largest economy in 2018. But experts say the country's growth has been slowed by various restrictions and high taxes. CGTN Shweta Bajaj has more.

Narendra Modi's visit to the ski resort town is to tell the world that India's time has come and its economy is a hotbed for investment. But back home economists say, bureaucracy remains a major hurdle to getting India on a high growth path.

MADHAV NALAPAT ECONOMIST "Better less government and that becomes better government. You need lower taxes, less regulations, you need all those things. Unfortunately till yet we still have high taxes, we still have high regulations and we have too much of the government, the fact is that Prime Minister Modi wants minimum government but so far the minimum government has not taken place."

Even as Modi pitches India as an attractive investment destination, officials acknowledge the need for land and labor reforms – to help pave the way for major companies to be able to set up factories and manufacturing units.

SUBHOMOY BHATTACHARJEE ECONOMIST "Regulation and governance remains a major issue. If you want to use labor, the flexibility is not there because the state there is a huge number of state and central laws that effect the use of labor and capital because of which the rates of interest are so high."

India's economy is outlooked to reach five trillion dollars by 2025. But this massive economy also needs to create jobs for its young population. And for that, Modi is looking to the manufacturing and services industries. His vision includes India becoming a global manufacturing hub, a dream that still needs major structural reforms.

SHWETA BAJAJ NEW DELHI "India's demographic dividend, or its young population, is known to be its strength. But it has about 20 to 25 years to use its potential and time is fast running out."

India's youth unemployment is expected to hover around 15 percent through this year.

MADHAV NALAPAT ECONOMIST "We need 11-12 percent growth. We need the same kind of growth that China had during the period of Deng Xiaoping when he was launching economic reforms systematically in 81, 82, 83. We need a double digit rate of growth, no 7 percent is not enough."

Shweta Bajaj, CGTN, New Delhi, India.