The World Bank has said that robust investment and private consumption would help drive economic growth of India for the next three years at 7.5 per cent.
India has been estimated to have grown at 7.3 per cent in the fiscal year 2018/19, which ended March 31 by the World Bank in its Global Economic Prospects released Tuesday. Solid investment, which benefited from public infrastructure spending managed to offset a slowdown in government consumption during the period.
The World Bank also projected China’s growth for 2019 to fall down to 6.2 per cent, then to 6.1 per cent for 2020 and record a further drop to 6 per cent for 2021. The growth rate of China in 2018 was at of 6.6 per cent.
If the projections of the World Bank turn out to be true for the three next three years, India would regain and hold the position of being the fastest growing major economy of the world. The World Bank’s projections also show that the economic growth rate of India would be 1.5 per cent more than China’s 6 per cent by 2021.
For the in Fiscal Year 2019/20 (April 1, 2019 to March 31, 2020), the growth rate for India is projected at 7.5 per cent by the World Bank which has been kept unchanged from the previous forecast of the Bank. The bank also predicts that the Indian economy would also continue ot grow that that rate for the rest of the two years of the projection period.
“Private consumption and investment will benefit from strengthening credit growth amid more accommodative monetary policy, with inflation having fallen below the Reserve Bank of India’s target,” noted the World Bank report.
The Bank said that the effects of political uncertainty around elections in FY2018/19 would be partially offset by the support from delays in planned fiscal consolidation at the central level.
A pickup in credit growth would support the urban consumption in India while soft agricultural price has hinder consumption in the rural areas, said the World Bank.
There was a slight moderation in the services and agricultural activity along with a speeding up in the industrial sector which resulted in broad-based robust growth on the production side. The Bank report also noted that lower rainfall resulted in subdued harvest in major crops which was reflected in the weakening agricultural production in the country.
A slowdown in trade, hotel, transport, and communication activity were the primary reasons for a softening of the services activity during the last fiscal year. Strong performance in manufacturing and construction sector accompanies with robust demand for capital goods helped the industrial sector to reap benefits. The Bank report also noted, based on the softening services and manufacturing Purchasing Managers’ Indexes, that the slow down in economic momentum at the end of 2018 was also carried into the first quarter of 2019.
The report also projected growth rate in India’s neighbor Pakistan with a projected growth of 2.7 per cent in FY2019/20 which is lower than last year’s anticipated growth.
(Adapted from News18.com)