The World Bank has raised its India’s growth forecast for the current financial year to 7 per cent, from an earlier estimate to 6.6 per cent. The World Bank in the India Development Update report said that the growth was boosted by public infrastructure investment and an upswing in household investments in real estate.
The World Bank also noted that the Indian economy’s growth will remain strong over the medium term.
World Bank’s country director for India Auguste Kouame said the country is becoming more dynamic in a challenging environment and it does not face the risk of falling in the middle income trap if it continues its policies and reforms.
India grew at 8.2 per cent in FY 2023-24, becoming the fastest-growing major economy in the world. Growth slowed to a 15-month low of 6.7 per cent in April-June 2024-25, mainly due to poor performance of the agriculture and services sectors, government data showed on Friday.
Earlier, the International Monetary Fund raised India’s gross domestic product (GDP) growth forecast for FY25 to 7 per cent. Moody’s Ratings has also raised India’s GDP growth projection for calendar year 2024 to 7.2 per cent from 6.8 per cent earlier.
Notably, in the April-June quarter, India’s GDP growth slowed to 6.7 per cent owing to a decline in government spending as a Model Code of Conduct was put in place for the General elections, government data showed on August 30.
Despite the revision, the World Bank’s outlook for the Indian economy remains less optimistic than that of the country’s central bank.
Reserve Bank of India (RBI) governor Shaktikanta Das, following the latest Monetary Policy Committee (MPC) meeting in August, said that the bank forecasts India’s GDP to grow 7.2 per cent in FY25.
On a comparative note, that forecast for India still lies on the more optimistic side. United States-based global banks Goldman Sachs and JP Morgan have maintained their FY25 GDP forecast for Asia’s third-largest and the world’s fifth-largest economy at 6.5 per cent. Its report noted that while the urban labor market had improved gradually since the peak of the pandemic, youth unemployment remained elevated at around 17 percent.
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