The World Bank has increased the growth forecast for India to 7 per cent for the current financial year as the agriculture sector sees growth, spurring rural demand.
Despite challenging global environment, India continues to see robust growth, said the report released by the global financial institution on Tuesday.
In June, India was projected to grow at 6.6 per cent for FY24. World Bank senior economist Ran Li said the latest revision of India's GDP forecast is prompted by improved monsoon. This has partially offset the marginal moderation in the agriculture industry, thereby increased private consumption, especially in rural areas.
In order to achieve its 2030 goal of $1 trillion merchandise exports, India should diversify its exports and leverage global value chains, pointed out the report. It added that the country should follow a three-pronged approach to reach the milestone: slash trade costs further, cut trade barriers and widen trade integration.
“With rising costs of production and declining productivity, India’s share in global apparel exports has declined from 4 percent in 2018 to 3 percent in 2022,” said Nora Dihel and Ran Li, senior economists at the World Bank who co-authored the report. They added that in order to creat more trade-related jobs, India can integrate more deeply into global value chains, which will also create opportunities for innovation and productivity growth.
Earlier, the Reserve Bank of India set the country's GDP forecast for FY25 at 7.2 per cent.
World Bank expects private investment to slowly improve consumption. One of the main challenges for India is reducing unemployment. However, the report pointed out that urban unemployment, which is currently at 17 per cent, is coming down as the number of women joining the workforce is on the rise
It said the country's medium-term economic growth rate will remain strong at an average of 6.7 per cent over the next two fiscal years.
