Main findings
Improving the macroeconomic framework to support sustainable and inclusive growth.
, growth faltered between 2012 and2014 as gains from past reforms diminished, and fiscal and monetary stimuli could nolonger be sustained due to high inflation and current account deficit.
As fiscal and monetary policies have been gradually tightened, the fiscal
deficit and inflation have started to decline while the current account deficit has narrowed.
Activity has rebounded in 2014 and is projected to accelerate but the implementation of
reforms is critical. The government efforts to simplify regulations and administrative
procedures should enhance rule of law. Still-high inflation, the fiscal deficit, rising nonperforming
loans, and structural bottlenecks are also key downside risks. Large energy and
fertiliser subsidies and delays in passing key tax reforms constrain the public investment
in physical and social infrastructure, including education and health, needed for long-term
growth and lower inequalities.
Raising employment and valued added from the manufacturing sector. The
manufacturing sector could contribute more to income, export and employment growth. In
recent years, structural bottlenecks have affected the manufacturing sector more than
services. Labour and tax regulations are complex and raise cost of doing business above a
certain size. Manufacturing firms therefore tend to be small and their productivity is low.
Firms often cannot find employees with the right education and training. Frequent power
outages, difficulty in acquiring land and poor transport infrastructure also make it difficult
for firms to be competitive and reach new markets.
Increasing female economic participation. Creating more and better employment for
women has a high growth potential. Female economic participation is low, reducing
growth and living standards. Many women work in marginal jobs and have much lower pay
than men. A host of factors constrain women in the labour market, including cultural
norms, safety concerns, lack of child care and poor infrastructure. At the same time, high
unemployment among educated women, revealed preference for work in surveys, and low
net job creation point to demand problems.
Improving health outcomes for all. Health outcomes have improved substantially but
remain below countries at a similar level of development. Lack of access to a clean water
supply, nutrition deficiencies and smoking all lower health but the recent initiative on
sanitation should help. And when they fall sick, most Indians do not have access to high
quality medical services. The low level of public resources invested in health, the lack of
health care professionals, poor regulation of health services, large out-of-pocket payments
and inequality in access to health care are serious issues, in particular for the poor and
those living in rural areas and urban slums.EXECUTIVE SUMMARY
OECD ECONOMIC SURVEYS: INDIA © OECD 2014 11
Improving the macroeconomic framework to support sustainable and inclusive growth.
, growth faltered between 2012 and2014 as gains from past reforms diminished, and fiscal and monetary stimuli could nolonger be sustained due to high inflation and current account deficit.
As fiscal and monetary policies have been gradually tightened, the fiscal
deficit and inflation have started to decline while the current account deficit has narrowed.
Activity has rebounded in 2014 and is projected to accelerate but the implementation of
reforms is critical. The government efforts to simplify regulations and administrative
procedures should enhance rule of law. Still-high inflation, the fiscal deficit, rising nonperforming
loans, and structural bottlenecks are also key downside risks. Large energy and
fertiliser subsidies and delays in passing key tax reforms constrain the public investment
in physical and social infrastructure, including education and health, needed for long-term
growth and lower inequalities.
Raising employment and valued added from the manufacturing sector. The
manufacturing sector could contribute more to income, export and employment growth. In
recent years, structural bottlenecks have affected the manufacturing sector more than
services. Labour and tax regulations are complex and raise cost of doing business above a
certain size. Manufacturing firms therefore tend to be small and their productivity is low.
Firms often cannot find employees with the right education and training. Frequent power
outages, difficulty in acquiring land and poor transport infrastructure also make it difficult
for firms to be competitive and reach new markets.
Increasing female economic participation. Creating more and better employment for
women has a high growth potential. Female economic participation is low, reducing
growth and living standards. Many women work in marginal jobs and have much lower pay
than men. A host of factors constrain women in the labour market, including cultural
norms, safety concerns, lack of child care and poor infrastructure. At the same time, high
unemployment among educated women, revealed preference for work in surveys, and low
net job creation point to demand problems.
Improving health outcomes for all. Health outcomes have improved substantially but
remain below countries at a similar level of development. Lack of access to a clean water
supply, nutrition deficiencies and smoking all lower health but the recent initiative on
sanitation should help. And when they fall sick, most Indians do not have access to high
quality medical services. The low level of public resources invested in health, the lack of
health care professionals, poor regulation of health services, large out-of-pocket payments
and inequality in access to health care are serious issues, in particular for the poor and
those living in rural areas and urban slums.EXECUTIVE SUMMARY
OECD ECONOMIC SURVEYS: INDIA © OECD 2014 11
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