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The World Bank has revised its growth forecast for the Indian economy to 7% for the current fiscal year, up from its earlier estimate of 6.6%.
This projection was shared in the World Bank's report titled ‘India Development Update: India’s Trade Opportunities in a Changing Global Context’, released on Tuesday.
The report highlights that India's economic growth remains robust despite a challenging global environment.
The World Bank's growth projection aligns with those of the International Monetary Fund (IMF) and Asian Development Bank (ADB), both of which have also revised their forecasts to 7% for the fiscal year ending March 2025.
Previous Fiscal Year Performance:
India was the fastest-growing major economy in FY 2023/24, with a growth rate of 8.2%.
Significant public investments in infrastructure contributed to this rapid growth.
An increase in household investments, particularly in real estate, also boosted the economy.
The manufacturing sector showed strong growth at 9.9%.
The services sector was resilient and played a key role in compensating for the underperformance in agriculture.
Employment Trends:
Urban unemployment has been gradually improving since the pandemic.
Female urban unemployment decreased to 8.5% in early FY 2024/25.
Despite improvements, urban youth unemployment remains high at 17%.
Impact on Poverty and Inflation:
India's strong growth prospects, coupled with a declining inflation rate, are expected to help reduce extreme poverty in the country.
Auguste Tano Kouame, World Bank's country director in India, emphasized that India's economic performance is conducive to reducing poverty.
Potential for Further Growth:
The World Bank suggests that India can further enhance its growth by leveraging its global trade potential.
Beyond its strengths in IT, business services, and pharmaceuticals, India could diversify its export basket to include textiles, apparel, footwear, electronics, and green technology products.
A recovery in agriculture is expected to partially offset a slight moderation in the industry, while services are projected to remain robust.
The report discusses the role of trade in driving growth, noting that the global trade landscape has seen increased protectionism in recent years.
Recommendations for Achieving Export Targets:
The IDU recommends a three-pronged approach to achieving this ambitious target:
Reducing Trade Costs: Further reduction in trade costs is necessary.
Lowering Trade Barriers: Efforts should be made to lower trade barriers.
Deepening Trade Integration: India should focus on deepening its trade integration with the global economy.
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