WORLD BANK ON INDIA’S GROWTH FORECAST

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Context

• The World Bank recently released the South Asia Economic Focus: Expanding Opportunities: Toward Inclusive Growth report.

Highlights of the Report

Forecast for the current fiscal year

• The World Bank has forecast a 6.3% economic growth rate for India in the current fiscal year (FY) which ends March 31 2024. This is a downgrade of 0.7 percentage points since its October forecast.

Reasons behind the downgrade

• The primary reasons for this are high borrowing costs and slower income growth causing weaker consumption, as well as the government tightening fiscal expenditure. 

Major concerns

• While India fared better than the rest of the South Asian region, two major concerns were the –
  • Female labour participation rate, which had dropped to below 20%, and
  • Informal sector neither becoming more productive nor shrinking.

Predictions for South Asia

• The South Asia region as whole is expected to grow at 5.6% this calendar year.

Performance of Services Sector

• The services sector — and then the construction sector — were the fastest going industries in India, according to the World Bank.
• Investment growth remained strong and business confidence was high in India, the report said.

Suggestions made in the Report

• There is still a huge structural agenda in India to make growth more inclusive to increase participation.
• Private investment from abroad needed to be increased, especially in the services sector.
• The government has done a lot to improve social protection, but that is by itself not enough. Ultimately, it is about increasing more opportunities in the labour market and there’s still a long way to go.

READ ABOUT WORLD BANK: https://www.iasgyan.in/daily-current-affairs/world-bank

PRACTICE QUESTION Q. Deep reforms of the World Bank are necessary as part of rethinking the current world order, and giving rising powers and developing countries a meaningful voice in this institution. Critically analyze.

https://www.thehindu.com/business/Economy/world-bank-cuts-indias-gdp-growth-forecast-to-63-in-fy24/article66697912.ece