India's growth will remain resilient amidst global headwinds, according to World Bank's newly released India Development Update (IDU).
The IDU is a half yearly report on the Indian economy released by the World Bank. The report has predicted a GDP growth rate of 6.3 per cent for India in the Financial Year 2023-24. The Bank has said that the reduction in the GDP forecast is owing to tough external conditions and reduced demand inside the country.
However, World Bank has also predicted service sector activity to remain strong with a growth of 7.4 per cent. India's growth with regards to investments is also expected to remain strong at 8.9 per cent.
Auguste Tano Kouame, World Bank's Country Director in India said that "an adverse global environment will continue to pose challenges in the short term."
"Tapping public spending that crowds in more private investments will create more favourable conditions for India to seize global opportunities in the future and thus achieve higher growth," he further added.
The IDU has predicted that global challenges will continue and intensify in the coming months. This is mainly due to high interest rates, geopolitical tensions, and a slowed demand in global markets.
The IDU report observed that India was one of the fastest growing major economies in the Financial Year 2022-23 at a GDP growth rate of 7.2 per cent. This growth rate was the second highest among G20 countries and almost twice the average for emerging market economies.
According to World Bank, Indian economy could hold such a steady growth due to high domestic demand, increased public infrastructure investment and a financial sector that went from strength to strength through the previous financial year.
India's bank credit growth increased in the first quarter of FY 23-24, by 15.8 per cent, much higher compared to 13.3% in the first quarter of the previous financial year.