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According to the update, recent data points to some improvement in economic activity, and that inflation and the trade deficit came down in the last few months, while private consumption and investment growth has accelerated in the third quarter of the financial year 2013.
"Despite the current downturn, long term prospects remain bright for India. India possesses the fundamental to grow at sustained high rates over the next several decades," said Martin Rama, World Bank's chief Economist for the South Asia region. "With the working age population increasing by 7 billion people each year, the country will need to improve its business climate to attract the private sector investment needed for these new entrants to find productive jobs, thereby reducing poverty and boosting shared prosperity," he added.
The update said that given India's demographic transition, even after 20 years, India is likely to remain a relatively young nation twenty years from now. "Inflation fell below 6 percent and the core inflation is now within the Reserve Bank of India (RBI) comfort range. With the stabilization of the rupee and the expectations of a good monsoon, inflation is expected to decline further in the coming months, the update said.
The update said that though the current account deficit was at a record high in the FY 2013, it is likely to narrow in the medium term. According to the World Bank, the additional expenditure required to finance the cost of progressing towards universal health coverage could range from 0.4% to 1% of the GDP by the end of the 12th Five year plan.
