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The World Bank in its latest report ‘Falling Long-Term Growth Prospects: Trends, Expectations, and Policies’ has said that India’s potential growth could benefit from accelerated implementation of an already ambitious reform agenda. The report said addressing the aftermath of financial sector distress in India could unlock significant growth. He said India has a less developed financial system than many of its peers, with a heavy state presence. To improve the sector’s efficiency and depth, reforms could be undertaken to further rationalise the role of public sector banks, ensure a level-playing field in the banking sector, and promote the development of capital markets.

On India’s infrastructure deficit, it said reforms suggested by the Task Force on the National Infrastructure Pipeline should be implemented, including improving project preparation processes, enhancing the capacity and participation of the private sector, improving contract enforcement and dispute resolution, and improving sources of financing. He stated said investment growth in India slowed from an annual average of 10.5 per cent in 2000-10 to 5.7 per cent in 2011-21. In India, structural bottlenecks, including unreliable power, poor road and rail networks, and arduous administrative requirements on business, have been barriers to investment over the past decade, along with banking sector weaknesses that have constrained investment finance.

It said warns that the global economy faces the prospect of a 'lost decade' on account of nearly all drivers of economic progress in recent history fading. It mentioned the global economy’s ‘speed limit’ - the maximum rate of long-term growth without causing inflation - is set to decline to its lowest point in three decades by 2030. It stated in the decade before COVID-19, a global slowdown in productivity - which is essential for income growth and higher wages - was already adding to concerns about long-term economic prospects.