The World Bank has pegged India’s growth rate at 6.3 per cent for 2023-24 notwithstanding the global headwinds. Even as this is lower than the 7.2 per cent growth rate registered in 2022-23, any figure above 6 per cent should be commended given the rising economic risks.   

Notably, the multilateral lender in its latest India Development Update said that the service sector activity is expected to remain strong with growth of 7.4 per cent. Investment growth is projected to remain robust at 8.9 per cent.

The World Bank has projected a growth rate of 5.1 per cent for China this year but for the next year, the multilateral lender has slashed the GDP growth forecast from 4.8 per cent to 4.4 per cent.

The World Bank noted that India’s growth rate was the second highest among G20 countries and almost twice the average for emerging market economies. In its report, it said that India continues to show resilience against the backdrop of a challenging global environment.

This resilience was underpinned by robust domestic demand, strong public infrastructure investment and a strengthening financial sector, it said. Bank credit growth increased to 15.8 per cent in the first quarter of the current financial year compared with 13.3 per cent in the first quarter of the previous fiscal year.

Inflation is expected to decrease gradually as food prices normalize and government measures increase the supply of key commodities. India’s retail inflation in August stood at 6.8 per cent. In July it was 7.44 per cent.

“While the spike in headline inflation may temporarily constrain consumption, we project a moderation. Overall conditions will remain conducive for private investment,” said Dhruv Sharma, Senior Economist, World Bank, and lead author of the report. “The volume of foreign direct investment is also likely to grow in India as rebalancing of the global value chain continues.”

Also read: India’s economy grows at 7.8% during April-June, highest in four quarters