Why is it in the news?
- Recently, the World Bank in its India Development Update (IDU), which is the Bank’s flagship report on the Indian economy retained India’s growth forecast at 6.3% for the year 2023-24. This forecast was consistent with the projection made by the World Bank in April for the same period.
- India had recorded a growth rate of 7.2% in the fiscal year 2022-23.
- The Reserve Bank of India (RBI) predicted a 6.5% growth rate for India in 2023-24.
More about the news
Factors Impacting Growth
- The expected moderation in growth was attributed to challenging external conditions and a decrease in pent-up demand.
- Despite this, the service sector was expected to remain strong with a growth rate of 7.4%, and investment growth was projected to stay robust at 8.9%.
- India was noted as one of the fastest-growing major economies in 2022-23, with a growth rate of 7.2%.
- India’s growth rate was the second-highest among G20 countries and nearly double the average for emerging market economies.
- India exhibited resilience in a challenging global environment.
Inflation and labour market
- The report highlighted improvements in the labour market, with significant declines in unemployment rates for men and youth.
- However, the increase in women’s workforce participation was primarily driven by unpaid family work.
Female labour force participation
- The report emphasized the need for India to increase its female labour force participation rate to achieve high-income country status.
- India’s female labour force participation rate is 25%, significantly lower than the average of around 50% for emerging market economies.
Global Economic Challenges
- Global challenges, including high global interest rates, geopolitical tensions, and sluggish global demand, were expected to persist and intensify.
- These challenges would likely lead to a slowdown in global economic growth over the medium term.
Opportunities For India
- The World Bank suggested that India could tap into public spending to attract more private investments, creating favourable conditions for higher growth.
- Foreign direct investment (FDI) in India was expected to increase as global value chains rebalanced.
Fiscal and External Front
- Fiscal consolidation was expected to continue, with the central government’s fiscal deficit projected
to decline from 6.4% to 5.9% of GDP.
- The current account deficit was expected to narrow to 1.4% of GDP, with sufficient financing from foreign investment flows and substantial foreign reserves.Top of Form
About World Bank
- It was created in 1944, as the International Bank for Reconstruction and Development (IBRD) along with the The IBRD later became the World Bank.
- The World Bank Group is a unique global partnership of five institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries.
- The World Bank is one of theUnited Nations’ specialized agencies.
- It has189 member countries.
- India is also amember country.
- Ease of Doing Business (Stopped publishing).
- Human Capital Index.
- World Development Report.
- Its Five Development Institutions
- International Bank for Reconstruction and Development (IBRD)
- International Development Association (IDA)
- International Finance Corporation (IFC).
- Multilateral Guarantee Agency (MIGA)
- International Centre for the Settlement of Investment Disputes (ICSID). India is not a member of ICSID.