World Bank retains India’s GDP growth at 7% for fiscal year 2024-’25

The World Bank has retained its estimate of India’s GDP growth at 7 per cent for the fiscal year 2024-’25 (FY25). The target will be achieved by a buoyant employment policy and the agriculture sector yielding better results than expected, which in turn will lead to strong private consumption, a new report by the World Bank says.

“Investment growth is expected to moderate from a high base. Projected growth is close to India’s pre-pandemic, FY2016/17–FY2018/19, average growth rate and higher than for most other major EMDEs,” the international financial institution’s report said. EMDE refers to Emerging Market and Developing Economies such as India.

The World Bank estimate of India’s economic growth for FY25 is in sync with the 7 per cent figure of the International Monetary Fund and the Asian Development Bank, but less than the Reserve Bank of India forecast of 7.2 per cent. The World Bank figure is also more than the prediction by several private analysts. The rating agency S&P global in September 2024 said it expected India’s economic growth in FY25 to be around 6.8 per cent while the research and consulting organisation Nomura predicted a 6.7-per cent growth for India’s GDP in the same fiscal year last month.

The real GDP growth for FY25, projected by the Economic Survey 2023-24, should be in the range of 6.5 to 7 per cent.

According to the World Bank report, modest rise in spending and steady increase in revenue will ensure fiscal consolidation in the medium term. Rise in public consumption can be expected to moderate, in sync with budgeted fiscal consolidation.

For South Asia, the World Bank report has hiked the growth projection to 6.4 per cent in 2024 from its earlier forecast of 6 per cent. The rise, the report says, will be driven by domestic demand in India as well as recoveries in Pakistan and Sri Lanka.