India set to retain its place as the fastest growing economy in the world

In what comes as welcome news for India, the World Bank has projected that the economic growth of India is all set to accelerate from next year. With this India is all set to retain its place as the fastest growing economy of the world comfortably.

The World Bank has reported that Indian Economy grew by 7.2 percent in 2018-19 in contrast to the estimate of 6.8 percent given earlier by the Indian Central Statistical Office (CSO) for the same time period. The World Bank’s Economic Prospects Report has further forecast India’s economic growth at 7.5 percent during the current fiscal and the next two years. India is going to grow at a stupendous rate even as the global growth remains modest at 3 percent. And is forecast to dip further to 2.6 percent this year.

As per the CSO, the Indian economy grew by only 5.8 percent in the last quarter, which dragged down the growth estimate for the last fiscal year. However, according to Finance Secretary Subhash Garg, this slowdown could be attributed to “temporary factors like stress in non-banking financial company (NBFC) sector affecting consumption finance”.

As per the World Bank, a slowdown in government consumption in India was offset by solid investment, which benefitted from public infrastructure spending. In sharp contrast to India’s growth figures, China’s growth rate is going to remain rather timid. The Chinese economy grew by 6.6 percent in 2018. As per future projections, its economy is going to slow down from here and the growth rate will dip to 6.2 percent this year, 6.1 percent in 2020 and 6 percent in 2021. Therefore, India will not only retain its position as the fastest growing economy of the world but will also widen its lead over China. As per the forecast, India’s economic growth will be a substantial 1.5 percent more than the Chinese growth rate of 6 percent.

The World Bank stated, “Private consumption and investment will benefit from strengthening credit growth amid more accommodative monetary policy, with inflation having fallen below the Reserve Bank of India’s target.” Commenting upon the timid global growth, World Bank Group President David Malpass said, “Current economic momentum remains weak, while heightened debt levels and subdued investment growth in developing economies are holding countries back from achieving their potential. It’s urgent that countries make significant structural reforms that improve the business climate and attract investment”. In such a scenario of tepid global growth, India’s growth story makes it a really bright spot on the world map. The Modi government couldn’t really have started off in a better manner on entering its second term. India is now all set to grow at an unprecedented level.