India is taking steps to accelerate economic growth to as much as 10 percent to meet the challenge of creating jobs for its “unusually large” and rising pool of young workers, Finance Minister Arun Jaitley said.
“India has that potential to make 9 to 10 percent its new normal in the years to come,” Jaitley said Wednesday in remarks at the Center for Strategic & International Studies in Washington. He is visiting the U.S. to attend the spring meetings of the International Monetary Fund and the World Bank.
By one estimate, 58 percent of India’s population was 15 to 59 years old in 2001, and the share will rise to 64 percent by 2021, Jaitley said, without citing the source. Economic growth between 5 percent to 7 percent will not be enough to meet the task of finding jobs for these workers, he said, adding investment in infrastructure, a focus on manufacturing, and steps such as reforms in land and labor laws will help provide employment.
Since taking office last May, Prime Minister Narendra Modi is making a push to attract investment in areas from construction and railways to insurance to boost the South Asian economy’s growth. India is forecast to grow between 8.1 percent to 8.5 percent in the fiscal year that began April 1, based on a new methodology announced in January.
The last fiscal year’s expansion was probably 7.4 percent, according to government projections after the nation recalculated its growth figures earlier this year in a move that’s perplexed economists.
Other estimates also point to a pickup. India’s economy will power past China’s for the first time since 1999 this year, according to the IMF’s World Economic Outlook released Tuesday.
India’s growth will climb to 7.5 percent, its fastest pace in five years, from 7.2 percent in 2014, the IMF said. China’s growth will slow to 6.8 percent in 2015 from 7.4 percent the prior year.
To spur its economy and employment, India has made efforts to increase foreign investment in insurance and defense, promote local manufacturing and enhance transparency in coal auctions. The moves have helped to drive gains in India’s stocks and currency over the past year.
Jaitley deviated from a road map to shrink India’s fiscal deficit in his budget presented Feb. 28, instead raising investment in infrastructure and buying time for longer-term moves on taxes and subsidies.