World Bank raised India’s growth forecast from 6.6 percent to 7 percent

Business.Business: The World Bank has raised the growth forecast for India’s economy for the current fiscal year to 7 per cent from 6.6 per cent. The revision comes amid expectations of strong economic performance driven by key factors such as private consumption and investment. According to the World Bank report, while the economy remains resilient, achieving the ambitious target of $1 trillion merchandise exports by 2030 will require strategic diversification and deeper integration into global value chains. It expects a gradual increase in private investment and a recovery in consumption. Meanwhile, it pointed out that job creation remains the main challenge to India’s economic growth. The World Bank said the urban unemployment rate remains high at an average of 17 per cent. Despite global economic uncertainties, India’s growth prospects remain resilient. According to the World Bank’s latest India Development Update (IDU), the country’s economy has maintained strength driven by factors such as better monsoon conditions and improving private consumption. Ran Li, senior economist at the World Bank, highlighted that these factors have contributed to the increase in India’s gross domestic product (GDP) forecast.

“India’s strong growth prospects, coupled with declining inflation, will contribute to reducing extreme poverty,” said Auguste Tano Kouame, World Bank Country Director in India. “To further accelerate growth, India needs to tap its global trade potential. Beyond its strengths in IT, business services and pharmaceuticals, India should diversify its export basket by expanding into sectors such as textiles, apparel, footwear, electronics and green technology products.” The World Bank report said India’s external economic indicators have improved. The current account deficit has narrowed, and foreign exchange reserves reached an unprecedented high of $670.1 billion in early August, equivalent to more than 11 months of import cover. These positive trends reflect India’s growing economic stability, even as it moves forward in a complex global environment. Further, the World Bank estimates that India’s medium-term economic outlook will remain positive, with growth expected to reach 7% in FY25 and maintain strength in subsequent years. Fiscal consolidation efforts and strong revenue growth are expected to reduce the debt-to-GDP ratio to 82% by FY27 from 83.9% in FY24. The current account deficit is estimated to be between 1% and 1.6% of GDP by FY27.