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
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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. |
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