World Bank on Tuesday (April 4) revised its forecast for India as it lowered the economic growth expectations in the current fiscal year that started on April 1 to 6.3 per cent from 6.6 per cent.
The international financial institution said that it expects that higher borrowing costs would hurt consumption. The World Bank said in a report: “Rising borrowing costs and slower income growth will weigh on private consumption growth.”
“Government consumption is projected to grow at a slower pace due to the withdrawal of pandemic-related fiscal support measures,” the report added.
World Bank also told a media outlet that in the second half of the last fiscal, India’s growth will continue to be resilient. However, there will be moderation in growth.
Auguste Tano Kouame, who is World Bank’s Country Director in India, told India-based media outlet NDTV that “whilst we have revised our forecast, India is still going to be one of the fastest-growing economies in the world”.
As quoted, he also said that India wants to become an upper middle-income country by 2030 and a developed economy by 2047, for which it will need to grow at eight per cent.
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The report mentioned that it projected the current account deficit to narrow to 2.1 per cent of gross domestic product for the current fiscal year from an estimated three per cent in the previous year.
World Bank economist Dhruv Sharma said that the impacts of the recent turmoil in financial markets in the United States and Europe pose a risk to short-term investment flows to emerging markets, including India. As quoted by news agency Reuters, Sharma said, “But Indian banks remain well capitalised.”
(With inputs from agencies)
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