The Indian economy is expected to grow at over six per cent in each of the next three years (File).
The World Bank has upgraded India's growth forecast for FY24/25 to seven per cent from 6.6 per cent, the global financial body said in an India-focused report released Tuesday that also said the country's "robust growth prospects, with declining inflation, will help reduce extreme poverty".
The World Bank report also said India was the fastest growing global economy in FY23/24 at 8.2 per cent, on the back of an improved labour market and continuing robust service trade.
Growth was boosted by public infrastructure investment and increased household real estate investments. On the supply side it was backed by a buoyant manufacturing sector that grew by 9.9 per cent, and resilient services activity that offset an underperforming agriculture sector.
Another positive point, the report said, is the gradual improvement in urban unemployment, with more women joining the workforce; in fact, female urban unemployment fell to 8.5 percent in early FY25. On the flip side, overall urban youth unemployment remains elevated at 17 per cent.
And, with robust revenue growth and further fiscal consolidation, the debt-to-GDP ratio is projected to decline from 83.9 per cent in FY24 to 82 per cent by FY27, with the current account deficit expected to remain at around 1.6 per cent of GDP up to FY27.
Looking further forward a positive medium-term outlook is expected with strong growth likely through FY26, at 6.7 per cent, and FY27, at 6.8 per cent, the report also said.
This comes even as global growth otherwise remains subdued compared to pre-pandemic levels, and underlines the emergence of a more dynamic India amid multiple geo-political challenges.
On the target of $1 trillion in merchandise exports by 2030, the World Bank's India Director, Auguste Tano Kouame, said, the key was in diversifying its export basket to include textiles, apparel, footwear, electronics, and green technology. There is significant room for the Indian economy to "boost its growth further by harnessing its global trade potential", Mr Kouame said in the report.
Acknowledging "increased protectionism" that has hampered the global trade landscape, particularly after the pandemic, the World Bank said this had created unique opportunities for India, which had responded well with its National Logistics Policy and digital initiatives to cut costs.
However, it was also noted that tariff and non-tariff barriers had increased and could, potentially, limit the potential for trade-focused investments.
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