NEW DELHI, Dec. 6 – The World Bank revised its growth prediction for India from 6.5% to 6.9% for fiscal 2022 on Tuesday, saying that nation is better positioned than many other rising economies to withstand the effects of global headwinds.
The estimate complied with recent government advice. India, the third-largest economy in Asia, grew by 6.3% in the quarter ending in July-September, and is expected to increase by 6.8 to 7% in the current 2022–23 fiscal year, which ends in March.
India, like many other developing nations, is struggling with inflation as a result of a rise in food and fuel costs on a worldwide scale following Russia’s invasion of Ukraine earlier this year. Due to this, the central bank raised its policy interest rates while issuing a warning about the effects of a global economic slowdown.
The World Bank’s country director for India, Auguste Tano Kouame, noted during the release of the India Development Update Report that “India’s economy has proven extraordinarily robust to the deteriorating external environment.”
According to him, India’s economy is resilient to deal with a financial crisis because to strong tax receipts, foreign reserves, and significant policy space, as well as cautious macroeconomic management.
He cautioned that while negative global trends continue, ongoing vigilance is necessary and that it will affect India’s growth potential.
The World Bank reduced its growth prediction for India, which will start its next fiscal year in April, from 7% to 6.6%.
India has suffered from rising commodity prices and interest rates set by central banks throughout the world, just like its international counterparts.
In contrast to other developing economies, the World Bank was optimistic that India would be far less affected by the global recession.
In light of the fact that public debt had decreased, World Bank economist Dhruv Sharma stated, “We have no worries about India’s debt sustainability at this time.
The analysis noted that a one-percentage-point decline in U.S. growth could decrease Indian GDP by 0.4 percentage points. For other developing economies, the impact of eroding growth in the United States, euro zone nations, and China was at least 1.5 times bigger than that of India.
The study said that average retail inflation for the current fiscal year was 7.1% and added that the decline in commodity prices may have a moderating effect on inflationary pressures.
In October, India’s annual retail inflation rate fell to a three-month low of 6.77%, but some experts think it might still be another two years before it reaches 4%, the middle of the Reserve Bank of India’s goal range.