World Bank retains GDP growth rate at 7.5%

Washington: India's economy is projected to grow at 7.5 per cent in the next three years, supported by robust investment and private consumption, the World Bank has forecast, in some good news to the new Indian government.

The bank in its Global Economic Prospects released here said that India is estimated to have grown 7.2 per cent in fiscal year 2018/19, which ended March 31. A slowdown in government consumption was offset by solid investment, which benefitted from public infrastructure spending. As against a growth rate of 6.6 per cent in 2018, China's growth rate in 2019 is projected to be dropped to 6.2 per cent and then subsequently to 6.1 per cent in 2020 and 6 per cent in 2021, the World Bank said.

With this, India will continue to retain the position of being the fastest growing emerging economy. And by 2021, its growth rate is projected to be 1.5 per cent more than China's 6 per cent. The World Bank's report came as a good news for India days after Data from Central Statistics Office (CSO) showed that India's economic growth slowed to a five-year low of 5.8 per cent in fourth quarter of 2018-19, pushing the country behind China.

The decline in the economic activity has been attributed by the CSO to steep decline in growth in agriculture and manufacturing sectors. According to the World Bank, growth in India is projected at 7.5 per cent in Fiscal Year 2019/20 (April 1, 2019 to March 31, 2020), unchanged from the previous forecast, and to stay at this pace through the next two fiscal years.

"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," it said.

Support from delays in planned fiscal consolidation at the central level should partially offset the effects of political uncertainty around elections in FY2018/19, it said. The World Bank said that India's urban consumption was supported by a pickup in credit growth, whereas rural consumption was hindered by soft agricultural prices.

On the production side, robust growth was broad-based, with a slight moderation in services and agricultural activity accompanied by an acceleration in the industrial sector. Weakening agricultural production reflected subdued harvest in major crops on the back of less rainfalls, it said.