Banking & Insurance

India’s Remarkable GDP Growth Projection: World Bank Forecasts 6.3% for FY24 Amidst Global Challenges

India's GDP Growth

In 2023-24, the World Bank expects India’s GDP growth to be 6.3% due to global headwinds. In its India Development Update (IDU) report released on Tuesday, the World Bank said that the expected moderation (from 7.2% in 2022-23) is largely a consequence of challenging external conditions and waning pent-up demand.

According to the World Bank report, India is expected to remain one of the fastest growing major economies with service sector growth of 7.4% and investment growth of 8.9%.

Despite a challenging global environment, India continues to show resilience -india’s GDP Growth

According to the IDU, the Bank’s flagship half-yearly report on the Indian economy, India was one of the fastest-growing major economies in FY22/23 at 7.2% despite significant global challenges.

The India’s GDP growth rate of India was the second highest among G20 countries and almost twice that of emerging market economies.

As a result of strong domestic demand, strong public infrastructure investment, and a strengthening financial sector, bank credit growth increased to 15.8% in the first quarter of FY23/24 from 13.3% in the same quarter of FY22/23.

Global headwinds, including high global interest rates, geopolitical tensions, and sluggish global demand, are expected to persist and intensify.

This combination of factors is expected to slow down global economic growth over the medium term.

In the short term, the adverse global environment will continue to pose challenges,” said World Bank Country Director Auguste Tano Kouame.

Investing in public spending to attract private investments will enable India to take advantage of global opportunities in the future and achieve higher growth.

Recent adverse weather conditions contributed to a spike in inflation.

As food prices normalize and government measures increase the supply of key commodities, headline inflation is expected to decrease gradually.

A spike in headline inflation may temporarily constrain consumption, but we project a moderation. Overall, conditions will remain conducive to private investment”, said Dhruv Sharma, Senior Economist, World Bank.

A rebalancing of the global value chain is also likely to result in a growth in foreign direct investment in India.

During FY23/24, the central government fiscal deficit is expected to decline from 6.4% to 5.9% of GDP, according to the World Bank.

At 83% of GDP, public debt is expected to stabilize.

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