If a recent World Bank forecast is to be believed, India's GDP is expected to grow at 7.3 per cent in the fiscal year 2018-19, and 7.5 per cent in the following two years, attributing it to an upswing in consumption and investment. According to the January 2019 Global Economic Prospects report released by the World Bank, India will continue to be the fastest growing major economy in the world. China's economic growth is projected to slow down to 6.2 per cent each in 2019 and 2020 and 6 per cent in 2021.
In 2018, the Chinese economy is estimated to have grown by 6.5 per cent as against India's 7.3 per cent. Last year, China with 6.9 per cent growth was marginally ahead of India's 6.7 per cent, mainly because the slowdown in the Indian economy due to demonetisation and implementation of the Goods and Services Tax (GST), the report said. World Bank Prospects Group Director Ayhan Kose said, “India's growth outlook is still robust. India is still the fastest growing major economy. With investment picking up and consumption remaining strong, we expect India to grow 7.3 per cent in the fiscal year 2018-19, and average 7.5 per cent in 2019 and 2020. India registered quite a bit of pick up in doing business ranking. The growth momentum is there.”
Growth in India has accelerated, driven by an upswing in consumption, and investment growth has firmed as the effects of temporary factors wane, the World Bank said. Domestic demand has strengthened as the benefits of structural reforms such as the GSY harmonisation and bank recapitlisation take effect. The Bank said, “India's growth accelerated to an estimated 7.3 per cent in FY2018/19 (April to March) as economic activity continued to recover with strong domestic demand. While investment continued to strengthen amid the GST harmonisation and a rebound of credit growth, consumption remained the major contributor to growth.”
Private consumption is projected to remain robust and investment growth is expected to continue as the benefits of recent policy reforms begin to materialise and credit rebounds. Strong domestic demand is envisioned to widen the current account deficit to 2.6 per cent of GDP next year. Inflation is projected to rise somewhat above the midpoint of the Reserve Bank of India's target range of 2 to 6 per cent, mainly owing to energy and food prices, the bank said.
