Asia’s third-largest economy recorded year-on-year growth of 4.4 per cent in October-December, down from 11.2 per cent a year back and 6.3 per cent in the preceding quarter.
To tame inflation, India’s central bank has raised interest rates by 250 basis points since May.
“Rising borrowing costs and slower income growth will weigh on private consumption growth,” the World Bank said in a report.
“Government consumption is projected to grow at a slower pace due to the withdrawal of pandemic-related fiscal support measures.”
The World Bank estimated last fiscal year’s growth at 6.9%.
It projected the current account deficit to narrow to 2.1% of gross domestic product for the current fiscal year from an estimated 3% in the previous year, on the back of robust service exports and a narrowing merchandise trade deficit.Spillover from recent turmoil in financial markets in the United States and Europe pose a risk to short-term investment flows to emerging markets, including India, said World Bank economist Dhruv Sharma.
“But Indian banks remain well capitalised,” Sharma said.
The finance ministry’s Economic Survey has projected economic growth to be 6.5 per cent in the 2023-24 fiscal beginning April 2023, while the RBI has projected India’s economic growth to slow down to 6.4 per cent in FY24 from 7 per cent in the previous fiscal.
S&P Global Ratings recently kept its forecast for India’s economic growth unchanged at 6 per cent in the fiscal year starting April 1, before rising to 6.9 per cent in the following year.
In the quarterly economic update for Asia-Pacific, S&P saw inflation rate easing to 5 per cent in 2023-24 fiscal, from 6.8 per cent in the current financial year.
It saw India’s gross domestic product (GDP) likely growing by 7 per cent in the current financial year ending March 31 (2022-23), before slowing to 6 per cent in the next 2023-24 fiscal.
“India leads, with average growth of 7 per cent in 2024-2026,” the update said.
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