The World Bank on Tuesday lowered India’s economic growth forecast to 6.3 percent for the financial year 2023-24 from its earlier estimate of 6.6 percent announced last December.
The international financial institution in its report attributed the downgrade to slower consumption growth and challenging external conditions.
“The World Bank has revised its FY23-24 GDP forecast to 6.3 percent from 6.6 percent (December 2022). Growth is expected to be constrained by slower consumption growth and challenging external conditions,” the report said.
“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.
According to the World Bank, India’s growth continues to be resilient despite some signs of moderation in growth. The report said although significant challenges remain in the global environment, India was one of the fastest-growing economies in the world.
“Growth was underpinned by strong investment activity bolstered by the government’s capex push and buoyant private consumption, particularly among higher income earners. Inflation remained high, averaging around 6.7 percent in FY22-23 but current account deficit narrowed in Q3 on the back of strong growth in service exports and easing global commodity prices,” it said.
The report projects current account deficit to narrow to 2.1 percent in FY23-24 from an estimated 3 percent in FY22-23 on the back of robust service exports and a narrowing merchandise trade deficit.
With regard to inflation, the report expects it to ease to 5.2 percent.