'Changes Needed Are Not Happening Quickly Enough': World Bank Chief Economist Indermit Gill On Structural Challenges In Indian Economy

World Bank Chief Economist Indermit Gill emphasised on Thursday (12 December) that while India is better positioned than many of its peers to navigate current global economic challenges, it must urgently accelerate structural reforms to sustain its growth momentum.

He said that India needs to accelerate its structural reforms to transition to a high-income country.

He observed that the share of middle-income countries in global GDP has grown, but their productivity and efficiency remain significantly below those of high-income economies.

"Time is of the essence for India to accelerate its structural reforms, and the changes needed are not happening quickly enough," Gill stated.

He urged policymakers to leverage the economy’s strengths while addressing inefficiencies and building institutional resilience.

Gill was speaking at the Global Economic Policy Forum 2024, organised by the Confederation of Indian Industry (CII) under the theme 'Decadal Priorities for the Global Economy.'

Highlighting the broader context, he noted that global economic growth has been steadily decelerating, with the potential growth rate in advanced economies halving over the past two decades.

Emerging markets and developing economies are similarly experiencing declining growth potential, a trend worsened by geopolitical tensions, trade fragmentation, policy uncertainty, and persistent inflation, Gill explained.

Focusing on India, Gill identified three major structural inefficiencies that need immediate attention:

Underutilisation of Capital: "Unproductive firms continue to operate, limiting the potential for resource reallocation to more efficient, value-adding firms," he said.

Talent Allocation: Despite rising demand for skilled labour, India struggles to fully utilize its talent pool, especially among women. "India continues to underutilise a major portion of its talent pool, particularly women," Gill noted.

Energy Efficiency: Gill highlighted that "India's energy-to-output ratios are high, making the country one of the most energy-intensive economies globally."

He reiterated the need for urgent reforms to tackle these inefficiencies, emphasising that India's ability to adapt quickly will determine its long-term economic resilience in an increasingly volatile global environment.

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