“Well-positioned”: World Bank upgrades India GDP growth to 6.9% in FY23
Virendra Pandit
New Delhi: With only three weeks to go before the next year kicks in, the World Bank on Tuesday forecasted that India’s GDP is expected to grow at a comfortable 6.9 percent in the current financial year (2022-23), unlike many other leading economies struggling to stay afloat in an increasingly uncertain era ahead.
This comes after a spate of Indian growth downgrades earlier by various banks and multilateral institutions. The World Bank had itself cut India’s FY23 GDP forecast to 6.5 percent from 7.5 percent in October.
However, within two months, the World Bank upgraded its forecast for India’s growth—from 6.5 percent in October to 6.9 percent in December—on the back of its economy’s relative resilience to external headwinds, and the ‘strong outturn’ in the July-September quarter. But it trimmed the expectation for the next fiscal year to 6.6 percent from 7 percent earlier.
In a report on Tuesday, the Bank also said India is “well-positioned” to tackle global headwinds and that, unlike other emerging economies, the global slowdown would have a much lower impact on India.
The government said last week that the Indian economy expanded 6.3 percent in the second (July-September) quarter of FY23, and its GDP growth for the full fiscal year (April 2022-March 2023) might be 6.8-7 percent.
India, like its global peers, has been plagued by a rise in commodity prices and tightening monetary policy by central banks worldwide.
“We have no concerns about India’s debt sustainability at this stage,” World Bank economist Dhruv Sharma said, adding that public debt had declined.
The report sees average retail inflation at 7.1 percent this year and warns that the fall in commodity prices could dampen inflationary pressures.
India’s annual retail inflation eased to a three-month low of 6.77 percent in October, but some economists think it could take up to two years before the rate eased to a comfortable 4 percent — the middle level of the Reserve Bank of India’s target.
“India’s economy has been remarkably resilient to the deteriorating external environment, and strong macroeconomic fundamentals have placed it in good stead compared to other emerging market economies,” Auguste Kouame, World Bank’s country director in India, said in the agency’s latest India Development Update on Tuesday.
The reason for India’s insulation from global spillovers is its large domestic market, which is relatively less exposed to international trade flows. The report said India’s external position has also improved considerably over the past decade.
“Policy reforms and prudent regulatory measures have also played a key role in developing resilience in the economy,” it stated.
India’s GDP expanded 6.3 percent in the September quarter, slower than the 8.4 percent growth a year ago, as factory output shrank and the base effect waned, official data last week showed. However, it was better than analysts’ expectations, which was among the reasons the World Bank cited for its latest growth upgrade.
