World Bank Lowers India's FY24 GDP Growth Forecast To 6.3 Per Cent, Says Indian Economy Continues To Show Resilience

The World Bank in its latest India Development Update has revised India's growth forecast for Financial Year 2023-24 from 6.6 per cent to 6.3 per cent.

In a statement on Tuesday (4 April), World Bank noted that India's growth is expected to be constrained by "slower consumption growth and challenging external conditions". 

"Rising borrowing costs and slower income growth will weigh on private consumption growth, and government consumption is projected to grow at a slower pace due to the withdrawal of pandemic-related fiscal support measures," the World Bank said.

However, the World Bank maintained that India’s growth continues to be resilient despite some signs of moderation in growth.

“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," Kouame added.

On inflation, the World Bank said that although India's headline inflation is elevated, it is projected to decline to an average of 5.2 percent in FY24, amid easing global commodity prices and some moderation in domestic demand.

The Reserve Bank of India has withdrawn accommodative measures to rein in inflation by hiking the policy interest rate, it said.

"India’s financial sector also remains strong, buoyed by improvements in asset quality and robust private-sector credit growth," the World Bank added.

Further, it said that the Indian government is likely to meet its fiscal deficit target of 5.9 percent of GDP in FY24.

"Combined with consolidation in state government deficits, the general government deficit is also projected to decline," it said, adding that as a result, the debt-to-GDP ratio is projected to stabilise.

On the external front, India's current account deficit is projected to narrow to 2.1 percent of GDP from an estimated 3 percent in FY23 on the back of robust service exports and a narrowing merchandise trade deficit, according to the World Bank.