The World Bank stated in its most recent report on Tuesday that despite some moderating in the second half of the previous fiscal, India’s GDP growth is anticipated to be robust. According to the study, The India Development Update, the growth rate is predicted to fall to 6.3% in FY24 as a result of decreased consumption brought on by reduced income.
According to the report, India’s retail inflation will moderate from 6.6% to 5.2% in FY2023–2024, and its current account deficit (CAD) is forecast to be at 5.2% in FY24.
The World Bank has decreased its FY23/24 GDP projection from 6.6% to 6.3%. (December 2022). Slower consumption growth and difficult external conditions are anticipated to be growth inhibitors. The increase in private consumption would be hampered by rising borrowing rates and weaker income growth, while the withdrawal of pandemic-related fiscal assistance measures is expected to restrict the growth of government consumption, the report stated.
The World Bank observed that the industrial and construction sectors, which suffered significant job losses as a result of the COVID pandemic, had an adverse effect on the growth rate. It was also observed that the labour market has performed better following the outbreak.
High levels of domestic demand, along with high levels of public investment and robust consumer spending by higher-income groups, served as the main drivers of growth. Nonetheless, it noted that low-income groups’ consumption was low because of the moderate rate of income growth.
In the third quarter of 2018, the Indian economy only increased by 4.4% year over year, as opposed to 11.2% a year earlier and 6.3% the quarter before.
According to the report, the economy will be driven forward despite global threats by a boom in India’s service exports, which reached their highest level in the quarter from October to December.
In the period from October to December 2022, India’s exports of services increased by 24.5% year over year, reaching a record $83.4 billion, according to statistics from the RBI that were made public on Friday last week. The services surplus, which excludes imports, increased by 39.21% to a record $38.7 billion. In addition, a decrease in the merchandise trade deficit resulted in a current account deficit that was lower than expected, coming in at $18.2 billion, or 2.2% of GDP.
In FY24, the CAD is predicted by the most recent World Bank study to be around 5.2%.
S&P Global Ratings, a rating agency, has maintained its projection for India’s economic growth at 6% and has not changed it recently.
