World Bank forecasts 6.7% growth for India over the next two years

Published 17-01-2025, 12:37 pm
© Reuters.  World Bank forecasts 6.7% growth for India over the next two years

India’s economic growth is set to maintain a steady pace of 6.7% annually for the next two fiscal years, as per the World Bank’s latest projections.

This forecast positions India as a resilient force in South Asia’s recovery, bolstered by robust private consumption and government-led initiatives.

With global economic uncertainty casting a shadow, India’s balanced mix of domestic demand, manufacturing revival, and sustained service sector growth stands out as a key factor in maintaining its trajectory.

This consistency underlines India’s growing role as a stabilising economic force in a volatile global landscape.

The services sector fuels India’s growth

The World Bank’s analysis emphasises that the services sector will continue to drive India’s growth, benefiting from structural reforms and expanding digitalisation.

The manufacturing sector, although facing challenges in the short term, is projected to gain momentum as government policies aimed at ease of doing business and infrastructure upgrades take effect.

These initiatives are expected to attract steady private investment, offsetting a predicted moderation in public spending.

India’s rural economy is also contributing significantly to private consumption.

Improved rural incomes, alongside higher agricultural output, have reinforced demand.

This dynamic creates a positive feedback loop, where rural prosperity supports consumer spending, which in turn aids broader economic recovery.

Private investment to anchor medium-term expansion

A notable aspect of India’s growth narrative is the anticipated shift in the investment landscape. The World Bank highlights a gradual transition from public to private sector-led investments.

Infrastructure projects and digital transformation are seen as catalysts for attracting foreign direct investment, particularly in green energy and technology sectors.

This shift is expected to mitigate risks associated with global economic headwinds.

While manufacturing experienced some softness, improvements in supply chain resilience and trade logistics are expected to strengthen industrial activity.

The government’s emphasis on reducing bureaucratic hurdles further enhances investor confidence.

India as a stabilising force

In comparison to its South Asian neighbours, India’s growth trajectory remains a standout.

While Pakistan and Sri Lanka have shown signs of recovery after adopting stringent macroeconomic reforms, their growth rates remain subdued.

In Bangladesh, political instability and supply-side challenges have hindered industrial progress, with growth expected to dip to 4.1% in FY2024/25.

Excluding India, South Asia’s growth is forecast at 3.9% in 2024, rising marginally to 4.3% by 2026.

This disparity underscores India’s role as a stabilising force in the region, contributing significantly to South Asia’s collective economic output.

The World Bank’s projection of 6.7% growth for India reflects the country’s ability to navigate global uncertainties while leveraging domestic opportunities.

With policy support for key sectors, rising private investments, and a focus on digital and green infrastructure, India is poised to sustain its position as an economic leader in the region.

This article first appeared on Invezz.com

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