World Bank asks India to improve its business climate
Updated: Jun 05, 2013 05:10:40pm
New Delhi, Jun 5 (KNN) India will need to improve its business climate to attract private sector investment so that it is able to generate employment for seven million people who join the country's workforce every year.
"In less than a generation, global saving and investment will be dominated by the developing world with India's share in global investments expected to almost double by 2030. No other country except China will be investing more than India globally," said the latest edition of World Bank's Global Development Horizons (GDH) report.
Further, India is the second most difficult country in terms of enforcing business contacts and ranks among the lowest five when it comes to dealing with construction permits, according to the World Bank ranking of doing business in 185 countries.
India had ranked 184 in the parameter of enforcing business contracts and 182 in terms of dealing with construction permits.
Overall, the country was placed at 132 for ease of doing business, well behind Bangladesh, Ethiopia, Honduras, Nepal and Pakistan.
However, yesterday’s report, titled “Capital for the Future: Saving and Investment in an Interdependent World,” said India’s share in global investments is expected to almost double by 2030.
Among the developing countries, China and India are expected to be the largest global investors. The two countries will also account for almost half of all global manufacturing investment.
"The two countries together will account for 38 per cent of the global gross investment in 2030. In fact, developing countries' share in global investment is projected to triple by 2030 to three-fifths, from one-fifth in 2000," the World Bank said.
Commenting on the findings of the report, World Bank senior vice president and chief economist Kaushik Basu said "In less than a generation, global investment will be dominated by the developing countries. And among the developing countries, China and India are expected to be the largest investors".
However, most of the investment might come from China since the report also said Brazil, India and Russia will together account for more than 13 per cent of global investment in 2030. This means that India's share will be less than 13 per cent. The combined share of Brazil, India and Russia will be more than that of the United States in 2030.
The report said developing countries are on course to add more than 1.4 billion people to their combined population between now and 2030.
By the mid-2020, India will be one of the economies with the highest ratios of working to non-working population. This, jointly with its large population and growing incomes, are the key explanations of why India will become a powerhouse in global savings and investment, it added.
The report made projections on the basis of two scenarios. One of them is gradual convergence scenario in which structural factors are assumed to evolve in fashion consistent with their historical patterns. The other is rapid convergence scenario in which structural transformations are assumed to break away from historical trends and proceed more quickly.
In fact, developing countries’ share in global investment is projected to triple by 2030 to three-fifths, from one-fifth in 2000. This is expected to change the landscape of the global economy and make the world’s economies more integrated than any time in history.
Among high-income countries, relatively strong institutions and continued technological advantage will mean that investment rates remain fairly stable, at around 17 per cent of output.
"As countries become richer, demand shifts toward services....In the gradual convergence scenario, services as a share of total investment in developing countries will grow from 57 per cent to 61 per cent," the report said. This shift will lead to increased demand for education, healthcare and infrastructure, and also a global drift "toward greater trade in services and a larger share of services being embedded in tradable goods," it pointed out.
WB estimates that by 2039, India will reach its maximum ratio of working to non-working age population with 2.2 working persons for every non-working one. (KNN)
"In less than a generation, global saving and investment will be dominated by the developing world with India's share in global investments expected to almost double by 2030. No other country except China will be investing more than India globally," said the latest edition of World Bank's Global Development Horizons (GDH) report.
Further, India is the second most difficult country in terms of enforcing business contacts and ranks among the lowest five when it comes to dealing with construction permits, according to the World Bank ranking of doing business in 185 countries.
India had ranked 184 in the parameter of enforcing business contracts and 182 in terms of dealing with construction permits.
Overall, the country was placed at 132 for ease of doing business, well behind Bangladesh, Ethiopia, Honduras, Nepal and Pakistan.
However, yesterday’s report, titled “Capital for the Future: Saving and Investment in an Interdependent World,” said India’s share in global investments is expected to almost double by 2030.
Among the developing countries, China and India are expected to be the largest global investors. The two countries will also account for almost half of all global manufacturing investment.
"The two countries together will account for 38 per cent of the global gross investment in 2030. In fact, developing countries' share in global investment is projected to triple by 2030 to three-fifths, from one-fifth in 2000," the World Bank said.
Commenting on the findings of the report, World Bank senior vice president and chief economist Kaushik Basu said "In less than a generation, global investment will be dominated by the developing countries. And among the developing countries, China and India are expected to be the largest investors".
However, most of the investment might come from China since the report also said Brazil, India and Russia will together account for more than 13 per cent of global investment in 2030. This means that India's share will be less than 13 per cent. The combined share of Brazil, India and Russia will be more than that of the United States in 2030.
The report said developing countries are on course to add more than 1.4 billion people to their combined population between now and 2030.
By the mid-2020, India will be one of the economies with the highest ratios of working to non-working population. This, jointly with its large population and growing incomes, are the key explanations of why India will become a powerhouse in global savings and investment, it added.
The report made projections on the basis of two scenarios. One of them is gradual convergence scenario in which structural factors are assumed to evolve in fashion consistent with their historical patterns. The other is rapid convergence scenario in which structural transformations are assumed to break away from historical trends and proceed more quickly.
In fact, developing countries’ share in global investment is projected to triple by 2030 to three-fifths, from one-fifth in 2000. This is expected to change the landscape of the global economy and make the world’s economies more integrated than any time in history.
Among high-income countries, relatively strong institutions and continued technological advantage will mean that investment rates remain fairly stable, at around 17 per cent of output.
"As countries become richer, demand shifts toward services....In the gradual convergence scenario, services as a share of total investment in developing countries will grow from 57 per cent to 61 per cent," the report said. This shift will lead to increased demand for education, healthcare and infrastructure, and also a global drift "toward greater trade in services and a larger share of services being embedded in tradable goods," it pointed out.
WB estimates that by 2039, India will reach its maximum ratio of working to non-working age population with 2.2 working persons for every non-working one. (KNN)
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