The World Bank has revised downwards India’s economic growth forecast for the current fiscal to 4.7 per cent.
This is against the 6.1 per cent growth projected in April.
India’s GDP growth is, however, expected to accelerate to 6.2 per cent in 2014-15, the World Bank said in the latest India Development Update released today.
The recent global market turmoil is unlikely to have major adverse effects on India and instead provides an opportunity to regain growth momentum through further progress on reforms, the update added. The World Bank’s latest India GDP growth forecast for the current fiscal is higher than the International Monetary Fund’s recent downward revised projection of 4.25 per cent (3.8 per cent at market prices) for 2013-14.
Although economic output growth in the first quarter of this fiscal fell to 4.4 per cent, growth is expected to rebound strongly in the second half, said Denis Medvedev, Senior Country, Economist, South Asia Region, World Bank.
The fourth quarter GDP growth is expected to rise above six per cent this fiscal, he added.
Besides, a bumper crop is expected in agriculture (where a five per cent increase in area sown is expected to raise agricultural growth to 3.4 per cent from 1.9 per cent a year ago) and exports are likely to benefit substantially from the rupee’s depreciation.
The current downturn presents an opportunity for India to push ahead with reforms to accelerate growth, said Martin Rama, Chief Economist for the South Asia Region at the World Bank.
The World Bank expects core inflation to trend down in the second half.
The second India development update has projected wholesale price index based inflation for 2013-14 at 5.3 per cent.
For 2014-15, the WPI inflation has been projected at 5.2 per cent.
Medvedev said that growth is expected to improve further in the medium term as strengthening exports support a recovery in industrial activity and new investment projects come on stream.
The report’s projections assume an improvement in the global macroeconomic environment with global growth accelerating to above three per cent in 2014 from around two per cent in 2013.
The recent depreciation in the rupee positions India well to take advantage of the global recovery, Medvedev said.