The Indian economy is expected to grow at 7.4 per cent in the current fiscal and its GDP growth will rise to 7.6 per cent in 2019-20, before tapering down to 7.4 per cent in 2020-21, according to a UN report released on Wednesday.
The report United Nations' World Economic Situation and Prospects (WESP) 2019 said that India's growth continues to be underpinned by robust private consumption, a more expansionary fiscal stance and benefits from earlier reforms.
"Yet, a more robust and sustained recovery of private investment remains crucial to lift medium-term growth," the report said, referring to the sustained slowdown in domestic private investment owing to various factors such as the massive accumulated non-performing assets (NPAs or bad loans) of banks, highly leveraged corporates and a general credit crunch.
"There is very little controversy about India's growth potential and there is a consensus about the country being poised on the 7.4-7.5 per cent gross domestic product (GDP) growth rate," UNESCAP's Director and Head South and South-West Asia Office, Nagesh Kumar, told reporters here at the launch of the report.
Noting that India's growth currently is fuelled by private consumption with the potential of expanding on the back of "pent-up demand", Kumar said that a revival of private investment could help push the country's growth trajectory above the 8 per cent level.
He said the downside risks to these growth projections are posed by political uncertainty bearing on the pace of reforms, global oil price volatility and financial instability created by a tightening in global financial markets.
On the global economic prospects, the report said it would continue to grow at a steady pace of around 3 per cent in 2019 and 2020, after expanding by 3.1 per cent in 2019, "amid signs that growth has peaked."
"However, a worrisome combination of development challenges could further undermine growth," it said.
The risks to the outlook are building, economic growth is uneven and is often failing to reach the regions and individuals where it is most needed, it added.
"These risks include waning support for multilateral approaches; the escalation of trade policy disputes; financial instabilities linked to elevated levels of debt; and rising climate risks, as the world experiences an increasing number of extreme weather events," the report said.
UN Secretary-General Antonio Guterres cautioned that while global economic indicators remain largely favourable, "they do not tell the whole story".
He also said the UN report raises concern over the sustainability of global economic growth in the face of rising financial, social and environmental challenges.