The World Bank has stated that India’s growth remains robust, despite some signs of moderation in the second half of the last fiscal year. The organization has revised its GDP forecast for FY23/24 from 6.6 percent to 6.3 percent due to slower consumption growth and challenging external conditions. Nevertheless, Auguste Tano Kouame, the World Bank’s Country Director in India, emphasized that India will still be one of the fastest-growing economies in the world. He noted that India has ambitious goals of becoming an upper-middle-income country by 2030 and a developed economy by 2047, which would require sustained growth at 8%. To achieve this, Mr Kouame stressed the need for deep reforms, including land and labour market reforms and ensuring small firms have sustained access to finance and long-term capital.
The speaker commended India’s progress in green finance and suggested its expansion to the private sector.
According to the report, the Covid pandemic led to significant job losses in the manufacturing and construction sectors, but the labor market situation has improved after the pandemic.
The report highlighted that India’s economic growth was mainly driven by strong domestic demand, supported by higher consumer spending by affluent groups and increased public investment. However, slow income growth resulted in weak consumer spending by low-income groups.
The World Bank has said that despite signs of moderation in growth during the second half of the last fiscal year, India’s growth continues to be resilient, and it is expected to be one of the fastest-growing economies in the world. The FY23/24 GDP forecast has been revised to 6.3% from 6.6% due to slower consumption growth and challenging external conditions. The World Bank’s Country Director in India, Auguste Tano Kouame, has suggested that deep reforms, including land and labour market reforms and sustained access to finance for small firms, are necessary for India to become an upper middle-income country by 2030 and a developed economy by 2047.
The report also pointed out that labour market outcomes have improved post-pandemic, but the manufacturing and construction sectors shed a lot of jobs during the COVID pandemic. The report noted that strong domestic demand driven by higher-income groups and higher public investment was the main growth driver, but consumer spending by low-income groups was weak due to slow income growth. Inflation remains above the upper threshold of the Reserve Bank of India’s target range of 2-6 percent, and there are downside risks to India’s growth in the current fiscal, including financial sector turmoil in the US and Europe, which could reduce appetite for emerging market assets and put pressure on the Indian rupee.
