Notwithstanding the external risks, India’s growth continues to be resilient, the World Bank in its latest India Development Update has said. The report noted that despite rising global challenges, which have led to a moderation in growth, India continues to be among the fastest growing economies in the world.
However, the multilateral lender lowered India’s growth projections for the new financial year from 6.6 per cent projected earlier to 6.3 per cent owing to lower consumption and external risks.
“The Indian economy continues to show strong resilience to external shocks,” said Auguste Tano Kouame, World Bank’s Country Director in India. “Notwithstanding external pressures, India’s service exports have continued to increase, and the current-account deficit is narrowing.”
As India aims to position itself as the global manufacturing hub, its S&P Global India Manufacturing Purchasing Managers Index (PMI) rose to a three-month high of 56.4 from 55.3 in the previous month, beating market expectations of 55.0. But more importantly, India’s PMI ranking on the global chart was the second highest – the first being Saudi Arabia with a score of 58.7. Besides India’s goods and services tax collection—a consumption based tax for March too increased by 13 per cent touching Rs 1.60 lakh crore in March.
Recently in an interview to news agency PTI, former Reserve Bank of India governor Raghuram Rajan said that India is “dangerously close” to the Hindu rate of growth after the country clocked a growth rate of 4.4 per cent during the October-December quarter.
While India’s economy grew at 6.3 per cent in the second quarter (July-September) it expanded 13.2 per cent in the first quarter (April-June).
The World Bank noted that while India’s headline inflation remains elevated, it is expected to decline to an average of 5.2 per cent in the current financial year driven by easing of global commodity prices and some moderation in domestic demand.
The International Monetary Fund’s Managing Director Kristalina Georgieva has echoed the same sentiments. In February, Georgieva said that India remains a “bright spot” in the world economy. Not just that. Moody’s Analytics noted that India’s domestic economy is the primary growth driver and that the slowdown in economic activity late last year will only be temporary.
Another ING report published in March also highlighted that the Indian economy will continue to grow as inflationary pressures ease, pushing real spending powers.
However, experts sounded a note of caution. “The world is going through an unprecedented churn and India must remain cautious at all times and not lower its guard,” an industry analyst said. The Reserve Bank of India will also play a key role in maintaining India’s macro-economic stability.
Also read: No “Hindu rate of growth,” consumer spending will drive India’s economic rise, says ING report
