India’s economy will grow 6.3% in the current fiscal year, according to an outlook released by the World Bank on Tuesday.
The report says the country’s resilience is underpinned by robust domestic demand, strong public infrastructure investment, and a strengthening financial sector.
According to the India Development Update, a half-yearly report on the Indian economy, the country was one of the fastest-growing major economies in the 2022-23 financial year, with growth of 7.2% despite major global challenges.
“India’s growth rate was the second highest among G20 countries and almost twice the average for emerging market economies,” the report said.
“Bank credit growth increased to 15.8% in the first quarter of the financial year of 2023-24 compared with 13.3% in the first quarter of 2022-2023.”
The World Bank economists added that global headwinds related to high interest rates, geopolitical tensions, and sluggish global demand will continue to hold back economic growth across the world.
“In this context, the World Bank forecasts India’s GDP growth for FY23-24 to be 6.3%. The expected moderation is mainly due to challenging external conditions and waning pent-up demand,” the World Bank said in the update.
The analysts predicted that the country’s service sector activity would remain strong with growth of 7.4%, while investment growth is projected to remain robust at 8.9%.
The Washington-based institution added that adverse weather conditions have contributed to inflation in recent months.
“Headline inflation rose to 7.8% in July due to a surge in prices of food items like wheat and rice. Inflation is expected to decrease gradually as food prices normalize and government measures increase the supply of key commodities,” the report reads.