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World Bank upgrades India’s GDP Growth Forecast for FY23 to 6.9%; Fitch retains it at 7%

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World Bank upgrades India's GDP growth forecast for FY23The World Bank (WB) in its latest ‘India Development Update- Navigating the Storm’ raised its Gross Domestic Product (GDP) growth forecast for India during FY23 to 6.9% from 6.5% in its October 2022 update. WB declined India’s FY23 forecast to 6.5% from 7.5% amid Russia-Ukraine War, rising global interest rates and high inflation.

  • This is the first upgrade of India’s growth forecast by any international agency amid the global turmoil.
  • However, India’s real GDP growth at constant market prices will be slower at 6.6% in the FY2023-24 as compared to 7% projected earlier.
  • India’s real GDP growth at constant factor prices will be 4% in FY2023-24.

Notably, India needs to grow at the rate of 8% and above to achieve its aim to become a developed country by 2047.


i.India’s economy has been remarkably resilient to the global challenges due to strong policy reforms and prudent regulatory measures. These have placed it in good position compared to other Emerging Market Economies (EMEs) viz. China, Mexico, Brazil which decelerated in Q2FY23.

ii.It will remain one of the fastest growing major economies in the world, due to robust domestic demand.

iii.Exports performed better than expected despite a slowing growth in major trade partners viz. the United States (US), United Kingdom (UK) and China; Russia-Ukraine war; and persistent global supply disruptions caused by global shortage of shipping containers and supply bottlenecks.

iv.Private consumption and investment continued to grow strongly in October 2022.

v.Electricity generation and freight traffic remained firmly above pre-pandemic levels.

Key Figures:

i.India’s economy grew at 6.3% in Q2FY23 as compared to 13.5% in Q1FY23.

ii.The services sector expanded 9.3% year-on-year as compared to 10.5% in Q2FY23 amid growth in business services, contact-intensive segments of retail trade, transport, hotels and restaurants, and public administration.

iii.Agriculture sector growth accelerated to 4.6% in despite erratic monsoon season and export restrictions on wheat and rice products.

iv.On the other hand, manufacturing sector continued to be adversely impacted by slowing external demand, global supply chain disruptions and higher input costs which resulted in 4.3% contraction in output.

v. It expected an inflation rate of 7.1 per cent in FY23, Inflation decelerated in October 2022 to 6.7%, but it is still above RBI’s tolerance band of 2-6%.

vi.Wholesale price index (WPI) has been in double digits since April 2021 and averaged 14.2% in the H1FY23.

  • WPI tracks prices at which businesses sell to each other.

vii.The central government is on track to meet its fiscal deficit target of 6.4 % of the GDP for FY23 due to strong growth in revenue collections which increased by 9.5% and spending by 12.2%.

viii.The Government deficit is projected to decline to 9.6% in FY23 from 10.3% in FY22 and 13.3% in FY221.

ix.Public debt is also projected to decline to 84.3% of GDP in FY23, from a peak of 87.6% in FY21.

x.At over $500 billion, India has one of the largest holdings of international reserves in the world. Though they have declined by about 13% in 2022, they still provide close to eight months of import cover.

Fitch retains India’s growth forecast at 7%

The Fitch Rating retained India’s growth forecast to 7% in FY23 amid stronger-than-expected outturn in its December edition of the Global Economic Outlook 2022.

  • However, it will slow to 6.2% in 2023-24 and 6.9% in 2024-25.
  • The Fitch estimated global growth expected to slip to just 1.4% in 2023 from its earlier projection of 1.7 percent in September 2022.

India’s Growth Forecast by Other Agencies:

i.In October 2022, the International Monetary Fund (IMF) in its World Economic Outlook had slashed India’s economic growth forecast to 6.8% for FY23 and 6.1% for FY24.

ii.In November 2022, Moody’s Investors Service lowered India’s GDP growth forecast to 7% from 7.7% for 2022. It expects growth to decelerate to 4. 8% in 2023 and then to rise to around 6.4% in 2024.

iii.Goldman Sachs projected Indian economy to expand by 5.9% in calender year 2023.

Recent Related News:

i.The Department of Economic Affairs (DEA), Ministry of Finance (MoF); Ministry of Housing & Urban Affairs (MoHUA); and the World Bank (WB) Group are jointly organising a 5-day focused workshop titled ‘Cities Creditworthiness Academy’ to create an enabling ecosystem for financing future cities of India.

ii.On November 14, 2022, the World Bank (WB) released a report titled ‘Financing India’s Urban Infrastructure Needs: Constraints to Commercial Financing and Prospects for Policy Action’. As per it, India needs to invest USD 840 billion over the next 15 years till 2036 (in 2020 prices) or an average of USD 55 billion (Rs 4.46 lakh crore) per annum into urban infrastructure to meet the needs of fast-growing urban population.

About World Bank (WB):

President– David Robert Malpass
Headquarters– Washington D.C, United States (US)
Establishment– 1944