On April 2, the World Bank increased its GDP growth forecast for India by 20 basis points to 6.6 percent for the fiscal year 2024-25.
While this projection for FY25 is notably more conservative compared to the estimate of a real GDP growth of 7.5 percent for the current financial year, the World Bank anticipates growth to accelerate in subsequent years as a decade of robust public investment starts to yield results.
India’s statistics ministry, in its second advance estimate of GDP for 2023-24, pegged the growth rate for the current year at 7.6 percent, reflecting an increase of 30 basis points from its initial estimate of 7.3 percent.
The anticipated slowdown in growth from 2023-24 to 2024-25 primarily stems from a deceleration in investment following its elevated pace in the previous year. However, growth in the services and industry sectors is expected to remain strong, with the latter benefiting from robust construction and real estate activity.
The World Bank’s South Asia Development Update for April 2024 highlights expectations of subsiding inflationary pressures, creating more room for policy easing. Over the medium term, fiscal deficit and government debt are projected to decrease, supported by strong output growth and consolidation efforts by the central government.
The Update forecasts South Asia’s growth at 6.0–6.1 percent in 2024–25, outperforming other emerging market and developing economies, largely driven by robust economic activity in India. Although growth is expected to pick up in other parts of the region, it is projected to remain below pre-pandemic levels.
South Asia’s growth outlook has been revised upward from previous forecasts, with India’s investment growth and faster-than-anticipated recoveries in Pakistan and Sri Lanka contributing to this adjustment, according to the World Bank’s Update.
