World Bank has revised India forecast for this financial year to 6.3 per cent from its earlier 6.6 per cent due to shrinkage in consumption on back of slower income. The World Bank expects inflation to be 5.2 per cent and current account deficit to go down to 2.1 per cent.
According to analysts and economists, a surge of services exports that hit a record high in the quarter ending December will help shield Indian economy from external risks as it is expected that a global slowdown could impact the country’s merchandise exports.
According to the World Bank report, India’s growth continues to be resilient amid global uncertainties and despite some signs of moderation in growth in the second half of the last financial year. It said that manufacturing and construction sectors are concern sectors but the labour market outcomes have improved post-pandemic.
The India Development Update, The World Bank India’s Biannual flagship publication said that inflation is elevated, but the pressures are moderating as food and fuel prices have moderated. However, Inflation continues to remain above the upper threshold of the Reserve Bank of India’s (RBI) target range of 2 to 6 per cent.
The RBI’s Monetary Policy Committee has hiked the repo rate by 250 basis points since May 2022. The World Bank also said that the current account deficit also dropped in the third quarter of the last financial year as the commodity prices eased.