07 Dec World Bank updates India GDP growth projection
World Bank raises India GDP growth projections
The topic is based on India’s GDP growth forecast. The article also talks about how World Bank’s update on India GDP growth projections impacts India’s Economy.
Relevance for Prelims: GDP, Growth, and Development
Relevance for Mains: Jobless growth in India, Macroeconomic fundamentals
Context: The World Bank has lifted its growth forecast for the Indian Economy this year to 6.9% after downgrading it to 6.5% in October 2022.
Reasons for the reversal of India’s GDP Projections
- The Bank said it revised owing to the strong upturn in the July-September quarter of 2022-23 where India grew at 6.3% despite inflationary pressures.
- The government has continuously focused on increasing capes (Capital Expenditure supporting domestic demand.
- Indian Economy has been resilient to deteriorating external environment as compared to similar emerging economies.
- India’s Forex reserves have declined by 10% but still provide an adequate buffer against global spillovers with about 8 months of import cover.
Concerns associated with growth:
- Jobless Growth: India’s GDP has increased but the employment rate has decreased over time indicating jobless growth and disguised unemployment.
- Inflation: Black swan events like COVID-19 and Russia’s war on Ukraine have impelled countries to aggressively hike rates which have crushed liquidity in hands of commercial players bringing the growth rate down.
- High Subsidy Bills: Higher revenue from cess could only offset subsidies given to weaker and vulnerable sections.
The confluence of multiple challenges on the external front poses a challenge to India’s growth trajectory, but balanced policymaking will help India navigate global headwinds.
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