World Bank has estimated an 8.3% growth in the Indian economy in FY22 and 8.7% in FY23. Compared to India’s immediate neighbours, the Indian economy rate is more vigorous.
Indian Economy Grows at 8.3% in FY22
The Global Economic Prospects report expects the Indian economy to grow at 8.3%. The forecast also predicts for FY 2022-2023 is 8.7% and 2023-2024 is 6.8%.
The report said, “an improving investment outlook with private investment, particularly manufacturing, benefiting from the production-linked incentive (PLI) scheme, and increases in infrastructure investment.”
The RBI and the International Monetary Fund estimated the Indian economy to by 9.5% in FY22. At the same time, the government’s statistics department estimated the economy to grow at 9.2%.
Given the economy is exceeding the pre-pandemic levels, the country’s statistics office expected India’s economy to grow by 9.2%.
How does the global economy look?
The Global Economic Prospects reports said, “After rebounding to an estimated 5.5% in 2021, global growth is expected to decelerate markedly to 4.1% in 2022, reflecting continued COVID-19 flare-ups, diminished fiscal support, and lingering supply bottlenecks. The near-term outlook for global growth is somewhat weaker, and for global inflation notably higher, than previously envisioned, owing to pandemic resurgence, higher food and energy prices and more pernicious supply disruptions.”
Nevertheless, as pent-up demand and supportive macroeconomic policies relax, global growth is expected to soften to 3.2% in 2023.
While the economic decline in the past two decades is slowly reversing, the pandemic has raised global income inequality. The World Bank report states that a comprehensive package of policies is in order to attain an equitable development path.
What are the challenges faced by the global economy while the Indian economy rises to 8.3%?
The global economy is struggling to recover amid supply bottlenecks, climate change, and inequality. While the Indian economy is estimated to rise to 8.3% in FY22, various new virus strains and diminished policy support can decelerate the global economy.
Loan-dependent countries and developing economies will require debt restructuring, while recovery can be challenging.
The challenges faced by the emerging market and developing economies are increasing inflation pressure and reduced fiscal space.
Eventually, EMDEs will have to adopt reforms to sustain commodity shocks and methods for crisis preparation and reduced inequality.
World Bank Group president David Malpass said, “Against this mix of encouraging and troubling news, it is clear that challenging times lie ahead for the global economy—and particularly for developing countries—as economic stimulus slows and credit conditions tighten. Putting more countries on a favourable growth path will require concerted international action and a comprehensive set of national policy responses.”
While the Indian economy is estimated to rise at 8.3%, the troubling economic developments advance by risks and uncertainty. The global recession of 2020 has surged international debt levels. Future debt restructuring is bound to face several challenges, as several countries are at high risk of debt distress and require debt relief.