Washington, DC: The World Bank released its Economic Prospects Report on Tuesday where India’s economy is projected to grow at 7.5% for the next two fiscal years, retaining its top spot as the fastest-growing major economy. A “more accommodative monetary policy” and low inflation would help, the report said.
According to the World Bank, India’s economy grew by 7.2% in 2018-19 in contrast to the recent Indian Central Statistical Office (CSO) estimate of only 6.8% growth during the period.
India’s growth forecast is the brightest spot amid grim forecasts for the world economy. The report said that the global growth rate was estimated at 3% last year and is forecast to dip steeply to 2.6% this year, before edging up to 2.7% next year and 2.8% in 2021.
#WBGEP2019 says global growth softened this year, and though it appears to be stabilizing, momentum remains weak. 2019 global growth downgraded 0.3 of a point to 2.6%, largest downward revision in three years. https://t.co/565ciFxuX4 pic.twitter.com/LBvFqLddFC
— World Bank (@WorldBank) June 4, 2019
India “is estimated to have grown 7.2% in the fiscal year 2018-19, which ended 31 March,” the report said. “A slowdown in government consumption was offset by solid investment, which benefited from public infrastructure spending,” it said.
On 31 May, the CSO said that India’s gross domestic product (GDP) growth during the 2018-19 fiscal stood at 6.8%, lower than the previous year’s 7.2%. The cut-off date for the data used in the report was 23 May.
As per the CSO report, the Indian economy grew by only 5.8% in the fourth quarter. That dragged down the fiscal year’s growth rate. Finance Secretary Subash Garg attributed the slowdown to “temporary factors like stress in the NBFC sector affecting consumption finance”.
The World Bank report said, “Growth in India is projected to accelerate to 7.5% in FY 2019-20.” It added, “Private consumption and investment will benefit from strengthening credit growth in an environment of more accommodative monetary policy, and with inflation below the Reserve Bank of India’s target.”
Growth projections for India made by different organisations vary a lot. Last month, the UN had downgraded India’s growth rate for the current fiscal year to 7%, a cut of 0.6% from the projection made in January. It reduced the forecast for the next fiscal year by 0.4% to 7.1%. It estimated last fiscal year’s growth rate to be 7.2%.
In April, the IMF cut India’s growth projections for this year by 0.2% from the 7.5% made in January to 7.3%. It projected the next year’s growth at 7.5% though lower than the earlier 7.7% projection.
The Indian Development Bank said in April that India’s growth rate would be 7.2% this year and 7.3% next year.
China’s economy grew by 6.6% last year and is forecast to grow by 6.2% this year and further decelerate to 6.1% next year and 6% in 2021, the World Bank said.
Pakistan was estimated to have grown by 5.2% last year but is forecast to steeply decline to 3.4% this year and 2.7% next year, before recovering to 4% in 2021, according to the report.
This despite “financial assistance from Gulf countries and China and an International Monetary Fund programme (that) have helped rebuild confidence”, it said.