In a forecast made by the World Bank, India's economy is projected to grow at 7.5 per cent in the next three years owing to robust investment and private consumption. In its Global Economic Prospects released last week said that India is estimated to have grown 7.2 per cent in fiscal year 2018/19, which ended March 31. A slowdown in government consumption was offset by solid investment, which benefited from public infrastructure spending.
The report said, China's growth rate in 2019 is projected to be dropped 6.2 per cent, then 6.1 per cent in 2020 and 6 per cent in 2021, as against a growth rate of 6.6 per cent in 2018. The report came at a time when data from Central Statistics Office (CSO) showed that Indian economic growth slowed to five-year low of 5.8 per cent in fourth quarter of 2018-19, pushing the country behind China.
The decline in the economic activity has been attributed by the CSO to steep decline in growth in agriculture and manufacturing sectors. According to the World Bank, growth in India is projected at 7.5 per cent in fiscal 2019/20 (April 1, 2019 to March 31, 2020), unchanged from the previous forecast, and to stay at this pace through the next two fiscal years.
It said, "Private consumption and investment will benefit from strengthening credit growth amid accommodative monetary policy, with inflation having fallen below the Reserve Bank of India's target." It also said, support from delays in planned fiscal consolidation at the central level should partially offset the effects of political uncertainty around elections in FY2018/19.
On the production side, robust growth was broad-based, with a slight moderation in services and agricultural activity accompanied by an acceleration in the industrial sector. Weakening agricultural production reflected subdued harvest in major crops on the back of less rainfalls. The World Bank also said that India's urban consumption was supported by a pickup in credit growth, whereas rural consumption was hindered by soft agricultural prices.