World Bank predicts 7.5% GDP growth for India till 2021
WB upbeat on India's economy
As the newly elected Finance Minister Nirmala Sitharaman prepares to present Union budget, the World Bank has posted a positive picture for Indian economy by declaring that the country’s economy grew by 7.2% in 2018-19 financial year.
The World Bank’s Economic Prospects Report released on Tuesday further forecast that the country’s economy would grow at 7.5% for the next two fiscal years, thus retaining its top spot as the fastest growing major economy of the world.
Ayhan Kose, Director of the World Bank’s Global Prospects Group said, “India’s recent growth numbers suggest that the economy remains robust despite temporary setbacks (due to demonetisation and GST).” The World Bank, in its latest report adds, “In India, the growth has accelerated, driven by an upswing in consumption, and investment growth has firmed as the effects of temporary factors wane.”
The World Bank report is optimistic about India’s GDP growth, and says private consumption is projected to remain robust and investment growth is expected to continue. The benefits of recent policy reforms will soon materialize.
While the growth prediction is 7.5 percent by World Bank, UN downgraded India's growth rate for the current fiscal year to 7 per cent and IMF cut India's growth projections for this year from the 7.5 per cent made in January to 7.3 per cent The Asian Development Bank forecast India’s growth rate at 7.2 percent for this year and 7.3 percent for next year. The marginal differences may be there in the projections, but the underlining fact remains that all are giving figures above 7 percent, which is remains a very healthy growth rate.
The Lutyens Media has made a big hue and cry about the first quarter’s results of only 5.8%, growth in GDP in 2019—in contrast to 6.6% in the previous quarter--and critical pieces on Indian economy is appearing every day.
Kose said that drop in first quarter was “expected” due to uncertainty in the run-up to the 2019 General Elections in April-May.
There is little denying though that the road ahead for Indian economy is tough. The US-China tariff war is not helping the global wind for growth. Further, US has also withdrawn Generalised System of Preferences (GSP). (It is a U.S. trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories.)
According to the Federation of Indian Export Organisation (FIEO), India’s exports to the US will remain unaffected by Trump’s latest move since it would only have a marginal impact on a few domestic sectors, such as processed food, leather, plastic, building material, tiles, engineering good etc.
On a brighter note, the US-China tariff war can benefit Indian industry as USA is planning to shift its units to other third world countries. The possibility of India benefiting through increasing exports to the US and a shift of foreign direct investment (FDI) to India may rise given the experience of Vietnam and Taiwan, which have emerged as main beneficiaries at China’s cost. For this, India requires a strategic approach to convert this opportunity into a major gain.
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