News Highlights:
- The World Bank has forecast a 6.3% economic growth rate for India in the current fiscal year (FY).
- The economic growth rate has downgraded by 0.7 percentage points since its October forecast.
Key Highlights of Forecast:
- India’s economic growth:
- The Indian economy is expected to grow at 4% in FY 2024-25, an upgrade of 0.3 percentage points from the previous forecast.
- The South Asia region as a whole is expected to grow at 6% for the financial year 2024-25.
- Reasons for the forecast for India:
- India has high borrowing costs,
- Slower income growth causing weaker consumption,
- The government is tightening fiscal expenditure.
- Female labour participation rate:
- Female Labour Force Participation Rate has increased to 25.1% in 2020-21 from 18.6% in 2018-19.
- Labour force participation rate is the proportion of the population ages 15 and older that is economically active: all people who supply labour for producing goods and services during a specified period.
- India’s growth prospects for different sectors:
- India’s economic survey has projected India’s GDP growth lies in the range of 6 % to 6.8% depending upon the economic and political trajectory.
- According to the World Bank, the services and construction sectors were India’s fastest-growing industries.
- Investment growth remained strong, and business confidence was also high in India.
- Trade, hotels, transport and communication; financing, insurance, real estate and business services and community, social and personal services account for more than 60 per cent of GDP.
- Agriculture, forestry and fishing constitute around 12 per cent of the output but employ more than 50 per cent of the labour force.
- Manufacturing accounts for 15 per cent of GDP, construction for another 8 per cent and mining, quarrying, electricity, gas and water supply for the remaining 5 per cent.
- Challenges:
- The impact of a tight global monetary policy cycle, slowing global growth and elevated commodity prices (inflation) and rising borrowing costs will affect domestic demand, particularly private consumption, in FY2023/24, while slowing global growth will inhibit growth in demand for India’s exports.
- These factors mean that the Indian economy will experience lower growth in FY23 compared to FY22.
- Suggestions
- The renewable energy and green economy sectors can create a lot of jobs.
- It cautions about trade-offs between trying to limit the adverse impact of global spillovers on growth and the available policy space.
What is the World Bank?
- About:
- It was created in 1944 as the International Bank for Reconstruction and Development (IBRD) along with the International Monetary Fund (IMF). The IBRD later became the World Bank.
- The World Bank Group is a unique global partnership of five institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries.
- The World Bank is one of the United Nations specialised agencies.
- Members:
- It has 189 member countries.
- India is also a member country.
- Its Five Development Institutions:
- International Bank for Reconstruction and Development (IBRD)
- International Development Association (IDA)
- International Finance Corporation (IFC).
- Multilateral Guarantee Agency (MIGA)
- International Centre for the Settlement of Investment Disputes (ICSID). India is not a member of this.
Pic Courtesy: Freepik
Content Source: The Hindu