New Delhi. The World Bank has raised the growth rate forecast of the Indian economy in the current financial year 2024-25 from 6.6 percent to seven percent. The World Bank has increased the growth rate forecast due to improvement in the agricultural sector and boom in rural demand. This is in line with the estimates of the International Monetary Fund (IMF) and the Asian Development Bank (ADB). Both multilateral financing agencies have raised their forecast to seven percent for the financial year ending March 31, 2025.
According to the Economic Survey, the country’s real gross domestic product (GDP) will grow at a rate of 6.5 to seven percent in 2024-25. However, the Reserve Bank of India (RBI) has projected a growth rate of 7.2 percent for the current financial year. The World Bank had earlier estimated in June that the Indian economy would grow at a rate of 6.6 percent in 2024-25. It has now increased it by 0.4 percent.
Senior World Bank economist Ran Li said that India’s gross domestic product (GDP) forecast is being revised upwards on the back of improved monsoon, private consumption and rising exports. The World Bank said in the ‘India Development Update’ (IDU) report released on Tuesday, “A large part of the South Asia region.. India’s growth rate is expected to be seven percent in 2024-25.
The report said, “Amid challenging external conditions, the World Bank expects India’s medium-term outlook to remain positive. The growth rate is projected to reach seven per cent in FY 2024-25 and remain strong in FY 2025-26 and 2026-27.” It said, with strong revenue growth and further fiscal consolidation, the debt-GDP ratio is projected to decline from 83.9 per cent in FY 2023-24 to 82 per cent by 2026-27.
The current account deficit (CAD) is expected to remain around 1-1.6 per cent of GDP by FY 2026-27. World Bank India Director Auguste Tano Kouame said that India’s strong growth prospects along with declining inflation rate will help reduce extreme poverty.
He said, “India can further boost growth by tapping its global trade potential. Apart from IT, business services and medicine where it excels… India can diversify its export segment by increasing exports in textiles, apparel and footwear as well as electronic and green technology products.” It said that the improvement in the agricultural sector will partially compensate for the slight decline in the industry and services will remain strong. The expected improvement in agriculture will also improve rural demand.
The ‘India Development Update’ (IDU) emphasised that to reach its merchandise export target of US$1 trillion by 2030, India needs to diversify its export segment and take advantage of global value chains. It can achieve the target by further reducing trade costs, removing trade barriers and enhancing trade integration.
Senior economists and co-authors of the report, Nora Diehl and Ran Li, said, “With rising production costs and declining productivity, India’s share in global apparel exports is projected to decline from four percent in 2018 to three percent in 2022.” He said that India can integrate more closely into global value chains to create more trade-related jobs. This will also create opportunities to increase innovation and productivity.