The World Bank retained its forecast of India’s growth rate at 7.5 per cent for the current financial year. In its Global Economic Prospects report, the World Bank also said growth rate is expected to remain the same for the next two fiscals.
“In India, growth is projected at 7.5 per cent in FY2019/20 (April 1, 2019 to March 31, 2020), unchanged from the previous forecast, and to stay at this pace through the next two fiscal years,” the World Bank said in its report.
According to the report, 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. Support from delays in planned fiscal consolidation at the central level should partially offset the effects of political uncertainty around elections, it added.
The outlook for South Asia over the forecast horizon is expected to remain solid, with regional GDP expected to expand to 6.9 per cent in 2019, 0.2 percentage point down from previous projections owing to downward revisions for Pakistan, but to pick up to 7 per cent in 2020 and 7.1 per cent in 2021.
The contribution of exports to economic activity is expected to remain weak with moderate global trade growth, the report mentioned. The World Bank, in its report, observed that the main domestic risks to the outlook include a re-escalation of political turbulence amid elections in some countries (Afghanistan and Sri Lanka); fiscal slippages with expanding public spending; and a resurgence of non-bank financial sector funding issues.
It further said the Goods and Services Tax (GST) regime is still in the process of being fully established, creating some uncertainty about projections of government revenues.