The World Bank has forecast a growth of 7% for the Indian economy for the current fiscal year, upping its earlier estimate of 6.6%.
In its report, India Development Update: India’s Trade Opportunities in a Changing Global Context, released New Delhi on Tuesday (September 3, 2024), the World Bank said India’s growth continued to be strong despite a challenging global environment.
The World Bank growth projection is in line with those of the International Monetary Fund (IMF) and Asian Development Bank (ADB). Both the institutions have raised their forecast to 7% for the financial year ending March 2025.
“The India Development Update [IDU] observes that India remained the fastest-growing major economy and grew at a rapid clip of 8.2% in FY 23/24. Growth was boosted by public infrastructure investment and an upswing in household investments in real estate. On the supply side, it was supported by a buoyant manufacturing sector, which grew by 9.9%, and resilient services activity, which compensated for underperformance in agriculture,” the World Bank said in a statement.
Reflecting these trends, urban unemployment has improved gradually since the pandemic, especially for female workers, it said. While female urban unemployment fell to 8.5 % in early FY24/25, the urban youth unemployment remained elevated at 17%.
India’s robust growth prospects, along with declining inflation rate will help to reduce extreme poverty, World Bank’s country director in India Auguste Tano Kouame said at a press conference in New Delhi.
“India can boost its growth further by harnessing its global trade potential. In addition to IT, business services and pharma where it excels, India can diversify its export basket with increased exports in textiles, apparel, and footwear sectors, as well as electronics and green technology products,” he said.
Mr. Tano Kouame added that a recovery in agriculture will partially offset a marginal moderation in industry and all services will remain robust. The rural private consumption will recover, thanks to the expected recovery in agriculture.
The report also highlights the critical role of trade for boosting growth. The global trade landscape has witnessed increased protectionism in recent years. The post pandemic reconfiguration of global value chains, triggered by the pandemic, has created opportunities for India, it said.
The IDU recommends a three-pronged approach towards achieving the $1 trillion merchandise export target by reducing trade costs further, lowering trade barriers, and deepening trade integration.
