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World Bank expects India's GDP growth to be better than expected but inflation to stay above 7%

economy | Dec 6, 2022 12:45 PM IST

World Bank expects India's GDP growth to be better than expected but inflation to stay above 7%

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The World Bank said it expects India's real GDP to grow at 6.9 percent in the 2022-2023 financial year, up from its previous projection of 6.5 percent.

The World Bank on Tuesday said it expects India's real GDP to grow at 6.9 percent in the 2022-2023 financial year, up from its previous projection of 6.5 percent.

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In its India Development Update, 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.
"India's economy has rebounded robustly post pandemic, driven by robust domestic demand which has also translated into a widening goods trade deficit...India is susceptible to sharp movements in foreign portfolio flows, but the capital mix has improved over the last decade with rising share of FDI," the bank said.
In October, it had cut India's GDP growth forecast to 6.5 percent from 7.5 percent earlier. India's gross domestic product (GDP), which grew 8.7 percent in previous 2021-22 financial year, rose 6.3 percent in July-September 2022-23.
The World Bank has, however, revised its GDP estimate for 2023-2024 fiscal downward from 7 percent to 6.6 percent.
For the current fiscal, the World Bank expects inflation to remain above 7 percent at 7.1 percent but in the 2023-2024, it may slip to 5.2 percent, the bank said.
Auguste Tano Kouame, Country Director, World Bank told the media that India in a fairly good position and the domestic market will help weather global trends. The measures taken by Indian policy makers have helped mitigate the impact on domestic economy, he said.
He added that global interest rate uncertainty could impact India and other emerging economies but he is very optimistic about the Indian economy's ability to withstand global shocks.
In the same report, the World Bank said India is on track to meet its fiscal deficit target of 6.4 percent of the GDP for 2022-23 on the back of strong growth in revenue collections. A high nominal GDP growth in the first quarter supported a strong growth in revenue collection, especially Goods and Services Tax (GST), despite tax cuts on fuel, the report said.
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