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India’s growth forecast downgraded by World Bank to 6.5% this year


The World Bank forecasts the growth rate of the Indian economy at 6.5% in the financial year 2022-23

Washington:

The World Bank today forecasts a growth rate of the Indian economy of 6.5% in fiscal year 2022-23, down 1% from previous projections in June 2022, due to the environment. international is deteriorating.

However, in the latest South Asian Economic Spotlight released ahead of the annual meetings of the International Monetary Fund and the World Bank, the Bank noted that India is recovering stronger than the rest. back of the world.

India’s economy grew by 8.7% in the previous year.

“The Indian economy has performed well relative to other countries in South Asia, with a relatively strong growth performance … has recovered from the sharp slowdown in the early stages of COVID,” said Hans Timmer, Specialist. World Bank’s chief economist for South Asia, told Press Trust of India in an interview.

“India has done relatively well with the advantage that it has no large external debt, no problems from that side and has a prudent monetary policy,” he remarked.

The Indian economy has performed exceptionally well in the services sector and especially in service exports.

“But we have downgraded our forecast for the new financial year that has just begun and that is largely due to the deteriorating international environment for India and for all countries. We see an inflection point. mid-year and the first signs of a slowdown worldwide,” he said.

The second half of the calendar year is weak in many countries and will also be relatively weak in India, he said.

That’s mainly due to two factors, Timmer said. One is slowing growth in the real economies of high-income countries.

The remaining issue is that tightening of global monetary policy tightens financial markets and not only leads to capital outflows in many developing countries, but also increases interest rates and uncertainty in other developing countries. developing countries, has a negative impact on investment.

“So India (India) has done relatively well. Not as vulnerable as some other countries. But the weather is still severe,” he said in response to a question.

India is doing better than the rest of the world, he said, adding that there are more buffer zones in India, especially large reserves at the central bank. That is very helpful. “After that, the government responded very positively to the COVID crisis,” he said.

The Indian government has set an example for the rest of the world, such as expanding the social safety net, using digital ideas. “I think they’re reaching close to a million people at the moment. That’s also a good response,” he said.

At the same time, he said he did not agree with all policies of the Indian government.

“Especially their response to high commodity prices may seem reasonable in the short term, but could be counterproductive in the long run. For example, an export ban on wheat and an export ban or tax. very high yield for rice exports,” he said.

They seem reasonable when it comes to creating food security in the country, but in the end that creates more problems in the rest of the region and the rest of the world.

“So not all policy is optimal, but rather a strong response to the crisis in terms of bailout efforts, aggressive monetary policies, and generally trend towards a more business-friendly environment”.

In response to a question, he said because India needs to address a number of key related issues.

“While we look at a relatively favorable growth rate, that’s growth supported by only a small portion of the economy. That sounds good, but if it doesn’t come from a broad base much more, that growth rate is relatively small. part of the economy doesn’t translate into significant income growth for all households,” he said.

Timmer points out that only 20% of women enter the labor market.

“It’s a problem that needs to be solved. You can’t solve that problem just by expanding your social security system. That’s important. Ultimately, people should be given the tools. to generate their own income,” he said.

“What we have seen in the region and to some extent in India is that the government has not really been prepared to absorb all the shocks that we are seeing in the region. COVID, the war in Ukraine and commodity prices have been shocks in a lifetime and they come and then are environmental disasters,” he said.

Neither the government nor the people are prepared to deal with that. And that’s because only too few people are fully participating in the economy, he argued, adding that it is India’s top priority to make progress there.

“In India, the focus is on big existing businesses. Focus on FDI. And that’s very good. The focus is on the social safety net. That’s also very good. But it’s still not enough. You need to. integrate more people into Timmer says.

(Except for the title, this story has not been edited by NDTV staff and is published from an aggregated feed.)

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