India’s economy is expected to grow 6.9 per cent in the current fiscal year, the World Bank said in a report on Tuesday, citing tightening monetary policy and high commodity prices as factors impacting the country’s growth.
The Bank had trimmed its growth forecast for India to 6.5 per cent in early October from a June forecast of 7.5 per cent. This marks the first agency to revise India’s growth forecast upward.
It, however, cut FY24 growth to 6.6 per cent from 7 per cent earlier. The report also sees average retail inflation at 7.1 per cent this year.
In its India Development Update, the bank said the revision was because of higher resilience of the economy to global shocks and better than expected second-quarter numbers by India Inc..
India’s economy grew at 6.3 per cent in the September quarter 2022-23 compared with 13.5 per cent in the preceding June quarter, mainly on account of contraction in output of the manufacturing and mining sectors.
This is the first upgrade of India’s growth forecast by any international agency amid the global turmoil.
“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,” World Bank’s country director in India Auguste Tano Kouame told reporters here.
Fitch forecast
Fitch Ratings has retained India’s growth forecast at 7 per cent for the current fiscal.
It, however, cut the projections for the next two financial years, stating that even though the country is shielded to some extent from global economic shocks but is not impervious to global developments.
In its December edition of the Global Economic Outlook, Fitch projected India’s GDP to grow at 7 per cent in the current fiscal and slow down to 6.2 per cent in 2023-24 and 6.9 per cent in 2024-25.
Observations
■ Economy has shown higher resilience to global shocks
■ India Inc reported better than expected Q2 numbers
■ Policy makers need to be vigilant as adverse global environment persists
