Indian Economy

The World Bank and Asian Development Bank have both revised downwards India’s growth forecast for the fiscal year 2023-24, mainly due to slower consumption growth and increased inflation amid global uncertainties.

According to the World Bank’s latest India Development Update, India’s GDP growth is now forecasted to be at 6.3 percent for the current fiscal year, which is lower than its previous estimate of 6.6 percent made in December 2022. Similarly, the Asian Development Bank has also cut its growth forecast for India from 7.2 percent to 6.4 percent.

The slowdown in consumption growth is expected to impact both private and government consumption. Rising borrowing costs and slower income growth will weigh on private consumption, while government consumption is projected to grow at a slower pace due to its renewed focus on infrastructure spending.

The World Bank estimates that private consumption growth is likely to moderate to 6.9 percent this fiscal from 8.3 percent last fiscal, while government consumption is estimated to contract by 1.1 percent in FY24 from a 1.2 percent growth in FY23.

The World Bank estimates that India’s headline inflation (retail inflation) would decline to an average of 5.2 percent in the current fiscal from 6.6 percent last fiscal.

Despite the downward revision, both agencies noted that the Indian economy remains resilient notwithstanding the external challenges.

As per the Economic Survey – 2022-23, the Indian economy is estimated to have grown by 7 percent in the fiscal year 2022-23 and is projected to grow at 6-6.8 percent in FY24.

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