Extolling the growth of the Indian Economy once again, the World Bank on Sunday said that the Indian economy is in the consolidation phase and is projected to accelerate to 7.3% in the 2018-2019, and 7.5% in the next two years with stronger private spending and export growth as the key drivers. The bank asserted that the economy seems to have recovered from the ephemeral disruptions caused by Goods and Services Tax(GST) implementation and demonetization move.
“Prompted by the adoption of the GST and the recapitalization of banks, growth in India is firming up and is projected to accelerate further,” the World Bank said in its latest report on South Asia.
On the production side, the turnaround in the second half was led by manufacturing (that grew at 8.8% versus 2.7% in the first half). Agriculture growth improved, and services growth held steady at 7.7%. On the demand side, the pick-up in growth was reflected in a sharp acceleration in gross fixed capital formation to 11.7% in the second half from 3.4% in the first.
Ascribing the unfavourable external situations, the World Bank has said that a worsening trade deficit has caused the current account deficit to widen- on the back of strong import demand, higher oil prices and exchange rate depreciation- from a mere 0.7% of the GDP in the fiscal 2016-2017 to 1.9% in this fiscal year.
Of the internal and external risks that India faces, the World Bank has cautioned high crude oil price and uncertain global trade environment may pose risk for the economy.
A few days back, the World Bank had lauded Modi Government’s policies, particularly Swachh Bharat mission, and claimed it to be world’s biggest sanitation movement.