India's structural reforms need acceleration: World Bank's chief economist Indermit Gill
He observed that the share of middle-income countries in global GDP has grown, but their productivity and efficiency remain significantly below those of high-income economies.
He added that India is better positioned than many of its peers to navigate the current global challenges. «Time is of essence for India to accelerate its structural reforms and the changes needed are not happening quickly enough,» he said, asking policymakers to capitalise on economy's strengths while addressing inefficiencies and fostering institutional resilience.
He pointed out three major structural inefficiencies in India's economy. The first is the underutilisation of capital, with unproductive firms continuing to operate and limiting the potential for resource reallocation to more efficient, value-adding incumbent firms. The second inefficiency is in talent allocation. Despite the increasing demand for skilled labour, India continues to underutilise a significant portion of its talent pool, particularly women. The third challenge is energy efficiency. India's energy-to-output ratios are high, making the country one of the most energy-intensive economies globally.
To transition to a high-income country, Gill suggested that India should prioritise improving productivity through infusion of new technologies and innovation, particularly encouraging the growth of large firms as they are often the engines of innovation.
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