India needs 8% growth, more female workers to become developed nation: World Bank economist

According to World Bank senior economist Dhruv Sharma, in order for India to become a developed country by 2047, the country needs to expand at around 8 percent, and such rapid growth is not achievable with the existing low level of female involvement in the workforce.

India hopes to join the ranks of the world's wealthy nations by 2047. Naturally, a quicker rate of growth is needed; the current rate of expansion is just about 6-6.5 percent. A growth rate of around 8 percent is required to qualify as a high-income country. And you can't get there if a sizable portion of your workforce — women — aren't contributing, Sharma said on October 3 in New Delhi, when the World Bank's India Development Update report was released.

"So, you need to get the female labour force participation rate to be higher for India to go from 6 percent to 8 percent and become a high-income country."

According to the government's Periodic Labour Force Survey reports, the Worker Population Ratio (WPR) for both men and women increased by 1.4 percentage points and 2.3 percentage points, respectively, in January-March 2023 from the year-ago period. However, the increase in the WPR for women was "primarily driven by an increase in the share of women in unpaid work," as noted by the World Bank in its India Development Update report.

"Moreover, women's jobs in India are of far poorer quality than men's, and the proportion of women in regular salaried employment is falling in metropolitan areas.

The research states, "Women in India are almost three times less likely to be employed than men," and that "even when they are employed, the average quality of their jobs is much lower" than that of men.

Country Director for India at the World Bank, Auguste Kouame, remarked that increasing the female labor force participation rate from its current level of around 25% to the average level of 50% for emerging market economies was a "very important topic" for India.

"The numbers show that India has made substantial financial commitments to the education of its women and girls. India has made tremendous progress... In reality, nowadays there are more women than men enrolled in colleges and institutions. Indian efforts to educate its female population have been successful. Now is the moment to put their knowledge and expertise to work for the country as it strives to become a high-income nation," Kouame said.

No fiscal slippage

While there is still work to be done in order to reach a GDP growth rate of 8%, the World Bank's view of the fiscal position is much more optimistic, with World Bank economist Amadou Kouame stating that there was "almost zero risk" of India failing to fulfill its fiscal deficit target this year due to the elections.

We are not factoring in substantial uncertainty surrounding fiscal policy as a result of the elections. He emphasized that there would be no easing of the government's planned course of fiscal restructuring.

In 2023-24, the Centre aims to bring the fiscal deficit down to 5.9 percent of GDP.

The World Bank predicts a general government budget deficit of 8.7 percent of GDP this year, down from 9 percent in 2017. This includes both the federal government and the individual states. The estimate is "consistent with the government's estimate," as Kouame put it.

While the "trend is in the right direction," the Bank has "no opinion" on whether or not the Centre will meet its medium-term fiscal deficit target of 4.5 percent of GDP by 2025-26, as stated by Kouame.

Given growth dynamics, robust Goods and Services Tax collections, and the government's capex drive, he added, there might be a "surprise on the upside," making it less difficult to alter spending to hit the deficit target.

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