Indian Economy GDP growth estimated at 7.5% in 2024! O world Bank projected that the Indian economy is expected to grow by 7.5 percent in 2024, marking a revision of its previous forecast by 1.2 percent. This growth is part of a strong outlook for South Asia, with the region expected to grow 6.0 percent in 2024, driven by strong growth in India and recoveries in Pakistan and Sri Lanka.
According to a PTI report, the World Bank's South Asia Development Update states that South Asia is poised to maintain its status as the world's fastest-growing region over the next two years, with growth projected at 6.1% in 2025.
The World Bank highlighted that India will be a major contributor to the region's economy and is expected to register an output growth of 7.5% in the financial year 2023-24, followed by a moderate decline to 6.6% in the mid-term. According to the World Bank, activity in services and industry is expected to remain robust.
The report also mentions positive signs in Bangladesh and Sri Lanka, with expected growth rates of 5.7% and 2.5%, respectively.
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Martin Raiser, Vice President for South Asia at the World Bank, expressed optimism about the region's near-term growth prospects, but warned about challenges such as fiscal vulnerabilities and climate risks.
Franziska Ohnsorge, chief economist for South Asia at the World Bank, emphasized the need for policies to increase private investment and employment growth to leverage the demographic dividend.
India's economic performance in the fourth quarter of 2023 exceeded expectations, with an 8.4% growth rate driven by investment and government spending. The country's Composite Purchasing Managers' Index (PMI) stood at 60.6 in February, well above the global average, indicating strong expansion. Inflation in India has been within the Central Bank's target range, supported by stable policy rates since February 2023.
Financial conditions in India remained favorable, with domestic credit issuance growing 14% year on year in December 2023. The non-performing loan ratio decreased to 3.2% and regulatory capital adequacy exceeded requirements. Despite the decline in FDI, foreign portfolio investments increased, leading to an increase in foreign reserves.
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Looking ahead, the World Bank forecasts India's output growth to reach 7.5% in financial year 2023-24, followed by a moderation to 6.6% in financial year 2024-25. The slowdown is attributed to a decrease in investment growth from the previous year's high levels. However, the bank expects robust growth in the services and industrial sectors, supported by construction and real estate activities.
In the medium term, the report predicts a decline in the budget deficit and public debt, supported by strong output growth and government consolidation efforts. The global outlook suggests a positive trajectory for India's economy, with the potential for dividend growth from public investment in the coming years.