In a surprise move the World Bank has scaled down its FY23 growth forecast for India to 7.5% from 8% predicted in April. It has given its reasons – rising inflation, supply-chain disruptions and the Russia-Ukraine conflict. The Bank has revised down its India growth projection for a second time since the Ukraine war began — it had cut its forecast by 70 basis points in April. The country’s GDP grew 8.7% in FY22.
World Bank has joined a number of agencies that have trimmed their growth projections for the country in recent months, after the Ukraine war pushed up global prices of commodities, especially oil. Moody’s recently scaled down the GDP projection to 8.8% for the calendar year 2022 from 9.1% earlier. S&P cut its FY23 projection to 7.3% from 7.8%. The International Monetary Fund had in April revised down its India forecast to 8.2% from 9% earlier.
In its latest issue of the Global Economic Prospects, the World Bank pegged India’s FY24 growth at 7.1%, up 30 bps from its April forecast but slower than the latest projected growth of 7.5% for the current fiscal. The focus of government spending in India has shifted towards infrastructure investment. Labour regulations are being simplified, underperforming state-owned assets are being privatised, and the logistics sector is expected to be modernised and integrated, the World Bank said.