India’s growth projection to 6.5%

News Highlight

The World Bank has cut its estimate for India’s growth in the current fiscal year (2022-2023) to 6.5%.

Key Takeaway

• The estimation is one percentage point lower than its previous projection in June compared to the last fiscal year’s 8.7% pace.
• The estimates were released as part of the World Bank’s twice-yearly South Asia Economic Focus Report.

The reasons for revision of India’s growth estimate.

• Persistent pressures:
  • The estimate for the current year was revised due to ‘persistent pressures.’
  • The report said that the slowdown in India’s growth during the current fiscal year, relative to the previous one, was because most of the COVID pandemic happened last year.
• The Russia­-Ukraine war and associated issues:
  • The impact of the Russia­-Ukraine war, global monetary tightening, high commodity prices and interest rates impacting domestic demand, contributing to this slowing.
• International environment:
  • The report has downgraded the forecast for the fiscal year that just started, mainly because the international environment is deteriorating for India and all countries.
  • The slowing of growth in the real economy of high-income countries.
  • The global tightening of monetary policy tightens financial markets, and not just that, it leads to capital outflows in many developing countries. Still, it also increases interest rates and uncertainty in developing countries, which negatively impacts investment.

Positives of the Indian economy:

• Above the South Asian average:
  • The report noted that India is recovering stronger than the rest of the world and India’s growth estimates are above the South Asian average.
• India’s prudent monetary policy:
  • India has done relatively well with the advantage that it doesn’t have a large external debt, no problems are coming from that side, and there is a prudent monetary policy.
• India’s services sector:
  • The Indian economy has done exceptionally well in the services sector and service exports.

The World Bank 

• About
  • The World Bank is an international financial institution, and It was formed with the International Monetary Fund at the 1944 Bretton Woods Conference.
  • It is headquartered in Washington, D.C, United States.
• Members:
  • The World Bank Group is a global partnership of 189 countries and five constituent organisations committed to alleviating poverty and promoting prosperity.
  • A country must first become a member of the IMF before joining the World Bank Group.
• The World Bank Groups:
  • The World Bank Group’s five development institutions are:
    • International Bank for Reconstruction and Development (IBRD)
    • International Development Association (IDA)
    • International Finance Corporation (IFC)
    • Multilateral Guarantee Agency (MIGA)
    • International Center for the Settlement of Investment Disputes (ICSID).
• Publications:
  • Ease of Doing Business
  • World Development Report
  • Global Economic Prospect (GEP) report
  • Remittance Report
  • Ease of Living Index
  • India Development Update
  • Universal Health Coverage Index
  • The Service Trade Restriction Index

Pic Courtesy: The HIndu

Content Source: The Hindu

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