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’s Resilience

• 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.

Members

• It has189 member countries.
• India is also amember country.

Major Reports

• 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.