Two multilateral agencies, World Bank and the Asian Development Bank (ADB), on Tuesday lowered their GDP-based economic growth rates for fiscal year 2023-24 (FY24) by 30 basis points and 80 basis points, respectively.

World Bank has revised its FY24 GDP forecast to 6.3 per cent as against its December projection of 6.6 per cent. “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 bank said.

However, ADB has cut its growth projection to 6.4 per cent from 7.2 per cent (as announced in December) for FY 24. “The growth moderation in FY2023 is premised on the ongoing global economic slowdown, tight monetary conditions, and elevated oil prices,” the agency said.

Also read: Economy slowed down to 4.4% in Q3; Govt hopeful of 7% growth in FY23

World Bank

Addressing a press conference to release the India Development Update, Auguste Tano Kouame, World Bank’s Country Director in India, said the Indian economy continues to show strong resilience to external shocks, notwithstanding “external pressures, India’s service exports have continued to increase, and the current-account deficit is narrowing,” he said.

Although headline inflation is elevated, it is projected to decline to an average of 5.2 per cent in FY 24, 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 The Reserve Bank of India has withdrawn accommodative measures to rein in inflation by hiking the policy interest rate. India’s financial sector also remains strong, buoyed by improvements in asset quality and robust private-sector credit growth.

Dhruv Sharma, Senior Economist with the World Bank, expects that the Centre is likely to meet its fiscal deficit target of 5.9 per cent of GDP in FY24, and combined with consolidation in state government deficits, the general government deficit is also projected to decline. As a result, the debt-to-GDP ratio is projected to stabilise. On the external front, the current account deficit is projected to narrow to 2.1 per cent of GDP from an estimated 3 per cent in FY23, on the back of robust service exports and a narrowing merchandise trade deficit.

However, Sharma clarified that this deficit estimate has not factored in the possible impact on the oil bill on account of a production cut announced by oil producing countries. “An increase of $10 a barrel could translate into a 40 basis points to half a per cent increase in CAD,” he said.

When asked about the impact of US and European banks going bust on Indian banks, Sharrma said that spill-overs from recent developments in financial markets in the US and Europe pose a risk to short-term investment flows to emerging markets, including India. “But Indian banks remain well capitalised and regulated,” he said.


While cutting its projection for FY24, ADB said FY 2024-25 (FY 25) is expected to see faster investment growth, thanks to supportive government policies and sound macroeconomic fundamentals, lower non-performing loans in banks, and significant corporate deleveraging that will enhance bank lending. It estimates the growth rate to be 6.7 per cent in FY 25.

“Despite the global slowdown, India’s economic growth rate is stronger than many peer economies and reflects relatively robust domestic consumption and lesser dependence on global demand,” said ADB Country Director for India Takeo Konishi.