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According to a report released by the World Bank on Tuesday, India’s economy will expand by 6.9% in the current fiscal year as a result of tighter monetary policy and rising commodity prices.
India’s growth domestic product (GDP) prediction has been raised from 6.5% to 6.9% for FY23 in the World Bank’s India Development Update, which also notes that India is well-positioned to combat global headwinds. The Bank reduced its forecast for the upcoming fiscal year from 7% to 6.6%.
The World Bank forecasts that inflation will be 7.1% in FY23 and noted that the decline in commodity prices may lessen inflationary pressures. Additionally, it stated that the Indian government was on track to meet its 6.4% fiscal deficit target. “India is affected by spillovers from the US, Euro area and China,” it said.
Commodity price increases and tightening monetary policies by central banks around the world have hurt India, just like they do its other global competitors. The World Bank is optimistic, meanwhile, that India will be significantly less affected by the global recession than other emerging economies.
According to the official figures provided last week, India’s GDP grew by 6.3% in the third quarter of this year, less than the 8.4% growth witnessed at the same time last year, as industrial production decreased and the base effect diminished.
The first quarter of India’s economy saw growth of 13.5%, and the second quarter’s growth was in line with expectations set by the Reserve Bank of India (RBI). The current fiscal year is expected to rise by 7%, according to the central bank.
India’s annual retail inflation rate decreased to 6.77% in October, a three-month low, but some economists think it may still be two years before it reaches 4%, the middle of the RBI’s target range.