The World Bank on Tuesday slashed India’s economic growth forecast for the current fiscal to 7.5 per cent, citing soaring inflation and supply chain disruptions.
This is the second time that the World Bank has revised its GDP growth forecast for the country in the current fiscal. In April, it had cut the forecast from 8.7 per cent to 8 per cent and now at 7.5 per cent.
This compares to an 8.7 per cent expansion in the previous 2021-22 fiscal.
In India, growth is forecast to edge down to 7.5 percent in the fiscal year 2022/23, with headwinds from rising inflation, supply chain disruptions, and geopolitical tensions offsetting buoyancy in the recovery of services consumption from the pandemic,” the World Bank said in its latest issue of the Global Economic Prospects.
Growth will also be supported by fixed investment undertaken by the private sec-tor and by the government, which has introduced incentives and reforms to improve the business climate. This forecast reflects a 1.2 percentage point down-ward revision of growth from the January projection, the World Bank said.
“Growth is expected to slow further to 7.1 percent in 2023-24 back towards its longer-run potential,” it added.
High inflation prompted the Reserve Bank to hold an unscheduled meeting to raise the benchmark interest rate by 40 basis points to 4.40 per cent last month and another hike is expected on Wednesday.
Prior to the World Bank’s action, global rating agencies too had slashed India’s economic growth forecast. Last month, Moody’s Investors Service trimmed the GDP projection to 8.8 per cent for the calendar year 2022 from 9.1 per cent earlier, citing high inflation.
