World Bank Retains India’s FY20 Growth Rate at 7.5%

In contrast to the CSO’s projection of 6.8%, World Bank said that India grew at 7.2% in 2018-19.

Photo used for representational purposes.

(Photo: Reuters)

As Finance Minister Nirmala Sitharaman prepares her budget, the World Bank reports India’s economy grew by 7.2 percent in 2018-19 in contrast to the recent Indian Central Statistical Office (CSO) estimate of only 6.8 percent growth during the period.

The Bank's Economic Prospects Report released on Tuesday forecast India's economy to grow by 7.5 percent during this and the next two fiscal years, retaining its top spot as the fastest growing major economy.

It would be helped by a “more accommodative monetary policy” and low inflation, it said.

The report retained the forecasts it made in January for India.

India's growth forecast is the brightest spot in a grim forecast for the world economy. The report said that the global growth rate was estimated at 3 percent last year and is forecast to dip steeply to 2.6 percent this year, before edging up to 2.7 percent next year and 2.8 percent in 2021.

India "is estimated to have grown 7.2 percent in fiscal year 2018-19, which ended March 31", the report said. "A slowdown in government consumption was offset by solid investment, which benefited from public infrastructure spending".

The Bank said that the cut-off dates for data used in the report was 23 May.

On 31 May, the CSO said that India’s gross domestic product (GDP) growth during the 2018-19 fiscal stood at 6.8 percent, lower than the previous year’s 7.2 percent.

The CSO said the Indian economy grew by only 5.8 percent in the fourth quarter. That dragged down the fiscal year's growth rate.

Finance Secretary Subash Garg attributed the slowdown to "temporary factors like stress in non-banking financial company (NBFC) sector affecting consumption finance".

The World Bank report said, "Growth in India is projected to accelerate to 7.5 percent in FY 2019-20."

"Private consumption and investment will benefit from strengthening credit growth in an environment of more accommodative monetary policy, and with inflation below the Reserve Bank of India's target", it added.