World Bank Revises India’s GDP Growth Projection, Tags Fastest Growing Major Economy

India's GDP growth estimate for the fiscal year 2024–2025 has been updated by the World Bank, which increased it from the previous prediction of 6.4% to 6.6%. This update confirms that among major economies, India is the one expanding at the quickest rate in the entire world. Increasing governmental investment, increasing private capital expenditure (capex), and rising private consumption are all reflected in the upward adjustment.

Reasons Behind the Revision

Strong Public Investment and Private Capex

The increased growth prediction is attributed by the World Bank to a notable increase in public investment coupled with substantial private capital expenditures. This combination has increased economic activity in a number of areas and laid the groundwork for long-term prosperity.

Resilient Domestic Demand

Strong domestic demand has been maintained by increased investment, especially in infrastructure. Pent-up demand following the pandemic has eased, the overall consumption growth is still strong and is boosting the nation's economy.

Sectoral Performance

Industrial Activity

India's manufacturing and construction industries have done better than anticipated. This sector's success has been essential in propelling the economy as a whole, counteracting a slowdown in agricultural output partially brought on by unfavourable monsoon conditions.

Services Sector

The services industry has been incredibly resilient, which has helped the nation's economy develop even more. The performance of this sector has assisted in offsetting deficiencies in other sectors, especially agriculture.

Future Projections

2025-26 Forecast

For the fiscal year 2025-26, the World Bank has also raised India's growth projection from 6.5% to 6.7%.

Comparison with Other Forecasts

Reserve Bank of India

Additionally, the Reserve Bank of India (RBI) increased its previously projected GDP for 2024–25 from 7% to 7.2%.

International Monetary Fund

India's growth estimates for 2024 have also been increased by the International Monetary Fund (IMF) from 6.5% to 6.8%, supporting the belief that India would continue to be the key driver of growth among major economies.

Other Institutions

• Morgan Stanley forecasts a 6.8% growth rate for India in 2024.
• United Nations recently increased its growth projection for India to 6.9% for 2024, driven by robust public investment and resilient private consumption.
• Moody’s Ratings expects India to grow at 6.6% in 2024-25.
• India's growth is expected to be 6.6% over the next two years, according to the Organisation for Economic Co-operation and Development (OECD).
• Asian Development Bank (ADB) has upgraded India's GDP growth forecast for 2024 from 6.7% to 7%.

Historical Growth Performance

India's GDP grew  an astounding 8.2% in the fiscal year 2023–2024, keeping it as the leading country with the quickest rate of growth. This was in line with growth rates of 8.7% in 2021–22 and 7.2% in 2022–23.

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