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India shows higher resilience to global shocks: World Bank

In the first upgrade of India’s growth forecast by an international agency amid the global turmoil, the World Bank said the revision was due to higher resilience of the Indian economy to global shocks and better-than-expected second quarter numbers

The World Bank has revised upwards India’s economic growth forecast from 6.5 per cent for India to 6.9 per cent for 2022-23, saying the world’s fifth largest economy was showing higher resilience to global shocks.

In the first upgrade of India’s growth forecast by an international agency amid the global turmoil, the World Bank said in its latest India Development Update that the revision was due to higher resilience of the Indian economy to global shocks and better-than-expected second quarter numbers.

The upward revision comes as a breather since the World Bank had been lowering India’s financial year 2022-23 growth forecast in its World Economic Outlook report since the last three times.

India grew 13.5 per cent in the first quarter of 2022-23, overtaking the UK to become the fifth-largest economy in the world. Multiple international bodies have studied the prospect of India’s economy growing steadily over the next year. Earlier, the October edition of the International Monetary Fund’s World Economic Outlook also projected India’s GDP growth for 2022-23 and 2023-24 at 6.8 per cent and 6.1 per cent, respectively.

In October, the World Bank had slashed India’s GDP forecast by one percentage point to 6.5 per cent from its June estimate of 7.5 per cent, citing the impact of ongoing war in Ukraine, rising global interest rates and high inflation.

India’s economy grew at 6.3 per cent in September quarter of 2022-23 as compared to 13.5 per cent in the preceding June quarter, mainly on account of contraction in output of manufacturing and mining sectors.

The report, titled “Navigating the Storm,” stated that while India’s growth prospects will be affected by the deteriorating external environment, the country’s economy is better positioned than most other emerging markets to withstand global spillovers.

Amid existing global challenges like tightening monetary policy cycle, slowing growth and elevated commodity prices, the Indian economy will experience lower growth in the 2022-23 financial year compared to 2021-22. However, the Washington-based bank reiterated that despite such challenges, India will register a strong GDP growth and remain one of the fastest growing major economies in the world, due to robust domestic demand.

In the first half of financial year 2022-23, India’s growth was supported by solid domestic demand and despite a challenging external environment, the report said. In contrast, other emerging market economies (EMEs) — China, Mexico, Brazil — decelerated in July-September 2022 quarter. The report said that exports performed better than expected despite challenging global growth conditions caused by slowing growth in major trade partners including the US, the UK and China; Russia-Ukraine war and persistent global supply disruptions caused by global shortage of shipping containers and supply bottlenecks.

Finance Minister Nirmala Sitharaman on Saturday said that there is a major reset happening in India and other countries and this has been happening rapidly post-pandemic, India, she pointed out, has moved from scarcity to sufficiency in the past two decades. Whether it is gas connections, phone lines or mobile phones, the country has come a long way and there is now enough and more in India.

Professor Rakesh Mohan Joshi, director of the Indian Institute of Plantation Management, was quoted as saying that India’s actions over the last decade have been strong and resilient.

“The entire world is facing two challenges, economic hurdles since the Covid-19 crisis and global-level conflicts such as the Russia-Ukraine war. So, even though the world ahead of us is projected to be in slow motion, the World Bank reviving India’s growth from 6.5 to 6.9 is a result of India’s strong measures in terms of transparency and credibility of our fiscal policy in light of our increased reliance on market borrowing.”

— issacjohn@khaleejtimes.com