In 2013-14, the Indian economy may expand 5.8 per cent and in 2014-15 it may grow 6.3 per cent, Naoyuki Shinohara, Deputy Managing Director of the IMF said.
This compares to an average growth rate of 8.7 per cent for the five years prior to the global financial crisis, he said.
Shinohara attributed the slowdown in the economy to three factors – the stagnant global economy, cyclical policies and structural domestic bottlenecks.
In order to address the structural bottlenecks, Shinohara said there is a need for infrastructure development in India.
The pace of growth of the economy declined as investment in new roads, factories, ports and energy has fallen, he said. Getting back to 8 per cent growth will require addressing the investment problem, and that means getting companies investing again, Shinohara added.
Project approvals have become more difficult, “perhaps because of the scandals related to big projects, increasingly complex and overlapping regulations and intensified scrutiny of all projects, he said.
Key infrastructure projects like road building, power plant construction are adversely affected by the slowdown in bureaucratic approvals, he said.
Measures such as establishing the Cabinet Committee on Investment can speed up project approvals but these approvals need to be accelerated, he said.
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