By Judith Ugwumadu | 16 October 2013

India must use the opportunity presented by global market turmoil to push ahead with reforms that will accelerate growth, the World Bank said today.

Its biannual India development update suggests that the depreciation in the rupee puts India in a good position to take advantage of the global recovery. Making the most of this opportunity, however, would require policy efforts including investment in infrastructure and banking and financial sector reforms. Fiscal balances should also be strengthened and business regulations liberalised so firms are encouraged to expand.

Martin Rama, the World Bank’s chief economist for South Asia, said higher rates of growth were ‘critical’ if India is to end poverty by 2030.

‘While the reform momentum has accelerated in the last few months, the current situation offers an opportunity to further strengthen the business environment and enhance fiscal space,’ he said.

Denis Medvedev, senior country economist at the World Bank in India, added: ‘The pace of poverty reduction in India has become faster over the years, growth has become more effective in reducing poverty, and a much larger fraction of the decline is taking place in low-income states.’

Between 2005 and 2012, India lifted 137 million people out of poverty and reduced the poverty rate to 22%. India has also improved its performance on shared prosperity, with consumption growth of the bottom 40% accelerating significantly since 2005, the report said.