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World Bank slashes India’s GDP growth forecast to 6.3%

April 05, 2023

World Bank slashes India’s GDP growth forecast to 6.3%
The World Bank on Tuesday cut India’s growth forecast for 2023-24 to 6.3% from its December estimate of 6.6% amid global headwinds and with rising borrowing costs and slower income growth leading to a moderation in consumption, even as its country director Auguste Tano Kouame said the Indian economy continues to show strong resilience to external shocks.

Meanwhile, the Asian Development Bank (ADB) on Tuesday said that India’s economy would grow at a slower-than-expected 6.4% this year. The growth estimates by both multilateral agencies are close to the Reserve Bank of India’s (RBI) February 8 forecast of 6.4% growth in 2023-24. The Economic Survey on January 31 projected India’s GDP growth at 6.5% in real terms, with a broader range of 6-6.8% depending on downside and upside risks.

The World Bank, in its latest India Development Update (IDU) report said the country’s growth is expected to be constrained by slower consumption growth and challenging external conditions. “Rising borrowing costs and slower income growth will weigh on private consumption growth, and government consumption is projected to grow at a slower pace due to the withdrawal of pandemic-related fiscal support measures,” it said.

Experts expect the Monetary Policy Committee of the Reserve Bank of India (RBI), which is holding its bi-monthly meeting from April 3-6 to raise policy rates for the seventh time to tame inflation, which remains over the central bank’s upper tolerance limit of 6%. A recent spike in international crude oil prices is one of the major worries for experts as India is a net importer of energy.

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