World Bank Projects Strong 6.3% Growth for Indian Economy in FY24 | Details

World Bank

World Bank: The World Bank’s latest report, released on Tuesday, anticipates a 6.3 per cent growth for the Indian economy in the current fiscal year. This growth is attributed to increased investments and domestic demand, highlighting India‘s ability to withstand a challenging global landscape.

Indian Economy predicted for 6.3% growth

The World Bank’s India Development Update forecasts strong growth of 6.3 percent in the fiscal year 2023-24 for India, which constitutes the majority of the South Asia region. The report also suggests that inflation is expected to decline gradually, attributed to the normalisation of food prices and government interventions aimed at enhancing the supply of essential commodities.

The World Bank has reported that South Asia is projected to achieve a growth rate of 5.8 percent this year, surpassing other developing regions globally. However, this growth is still slower than the pre-pandemic pace and falls short of meeting the region’s development objectives. Compared to the spring forecast, the growth projection for 2023 has been revised upward by 0.2 percentage points, thanks to better-than-anticipated economic data from India.

Despite the waning momentum of India’s post-pandemic economic recovery, it is anticipated to maintain a stronger growth trajectory compared to other significant emerging market and developing economies (EMDEs). The World Bank’s forecast indicates an expected growth rate of 6.3 percent in FY2023-24, followed by 6.4 percent in FY2024-25, aligning closely with India‘s estimated potential growth rate.

World Bank’s report on Indian economy

The World Bank’s assessment suggests that while the growth of merchandise exports may decelerate due to subdued foreign demand, this slowdown will be balanced by the resilience of services exports. In India, the initial half of 2023 witnessed robust output growth, underpinned by substantial investment expansion and sustained strength in the services sector. Government-backed infrastructure initiatives have bolstered activity in the construction sector, which has consistently achieved year-over-year growth rates of approximately 10 percent in recent quarters. Notably, export growth has been boosted by the impressive performance of services exports.

According to the World Bank, the financial sector in India has displayed resilience, with few indications of stress. Bank balance sheets and corporate leverage ratios have notably improved in recent years. The current account deficit has primarily been funded through foreign portfolio investment and remittances. India maintains healthy foreign exchange reserves, and its currency has experienced periods of stability along with minor depreciation. Furthermore, non-performing loans in the banking sector are relatively low.

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