India has the potential to grow at an average of
6.7 per annum per annum over the next five years and still remain the fastest
growing large economies, global ratings agency Fitch has said.
Even though this rate of growth is lower than the
potential and what policymakers have been aspiring for, it is ahead of the 5.5
per cent growth estimated for China and Indonesia, who are joined at the second
Demographic factors, where India is among the
youngest countries in the world with a maximum number of people in the working
age group, and investment rates will be aiding the country, it said in a report
The country is set to witness a continued robust
growth in the working-age population in the next five years, bolstering growth
potential, it said, adding Indonesia, Mexico, Turkey and Brazil will also
benefit from a similar trend.
The GDP recovered to 6.3 per cent in the September
quarter from a six-quarter-low of 5.7
per cent in the preceding June quarter. The RBI has massively cut its
estimates on growth for the full fiscal to 6.7%, but expects a bounce back in
the remaining two quarters at 7 and 7.5 per cent, respectively.
On its prediction for slower growth estimate on
China, the agency said the significant slowdown from recent historical average
growth is on a deteriorating demographic outlook and a slowdown in the rate of
capital accumulation as the investment rate has declined.
The agency said India has an “impressive rate of
capital accumulation per worker” which helps in maintaining the economic growth
and also in upping the living standards. However, it said going by total factor
productivity, which captures improvements in the efficiency of the production
process, India has some catching-up to do.
“Total factor productivity performance has also
been surprisingly weak given its low level of GDP per capita,” the report said.