The World Bank cut India's economic growth forecast to 7.5 percent

WASHINGTON : The World Bank on Tuesday slashed India's economic growth forecast for the current fiscal to 7.5 per cent. This was due to rising inflation , supply chain disruption and geopolitical tensions. For the second time, the World Bank has revised India's economic forecast for the current financial year 2022-23. In April, it revised its GDP estimate from 8.7 per cent to 8 per cent. It has now improved from eight per cent to 7.5 per cent. The World Bank has stated this in a new issue of global economic prospects.

The World Bank said it expects India's economic growth to slow further to 7.1 per cent in 206-2. Prices of everything from fuel to vegetables to cooking gas have gone up. Wholesale inflation, as measured by the Wholesale Price Index (WPI), reached a record high of 17.08 per cent in April and retail inflation reached an eight-year high of 7.79 per cent.

Inflation was raised by 0.40 basis points at an unplanned meeting of the Reserve Bank following high inflation. In addition, another increase is expected on Wednesday. However, even before the World Bank, global rating agencies had downgraded India's GDP growth forecast. Last month, Moody's Investors cut India's GDP growth to 8.8 per cent from 9.1 per cent in 2022-23.

This was due to high inflation. S&P Global has also projected India's GDP growth to slow to 7.3 per cent for 2022-23 from the previous 7.8 per cent. He cited high inflation and the protracted Russia-Ukraine conflict as the main reasons.

The Asian Development Bank has projected India's growth rate at 7.5 per cent. Unemployment has fallen to pre-epidemic levels. But the labor force participation rate is lower than the pre-epidemic level. Workers have turned to low-paying jobs.

India has shifted towards increasing government spending on infrastructure. Labor controls have been simplified. Government assets are being privatized. The logistics sector is supposed to be modernized and integrated. Long-term prosperity after multiple crises will depend on rapid growth and a stable policy environment.