Tag: dhruv sharma

India's GDP Growth Forecast

World Bank Revises India’s GDP Growth Forecast To 6.9%

By LokMarg

The World Bank has revised India’s 2022-23 GDP growth forecast upward to 6.9 percent from the earlier estimate of 6.5 percent, due to robust economic activities according to Dhruv Sharma, Senior Economist at the World Bank.

India’s real GDP growth is expected to be at 6.9 percent in FY22-23 compared to 8.7 percent in FY21-22, according to World Bank’s latest India Development Update.

“India is more resilient now than it was 10 years ago. All steps taken over the past 10 years are helping India navigate the global headwinds,” Sharma, senior economist at the World Bank said.

He added that India’s economy has rebounded fairly robustly following the contraction that occurred during the pandemic year. “This story of the rebound has been driven largely by robust domestic demand” said Sharma.

World Bank, in its October report, lowered India’s 2022-23 growth rate from its June forecast, by 1 percentage point to 6.5 percent. In the previous report, the international organisation had projected India’s growth rate to be at 7.5 percent for the period.

CPI-based retail inflation is showing signs of moderation, according to government data, however, still remains above the central bank’s upper tolerance level of 6 percent since January this year.

The inflation fell to 6.77 percent in October from 7.41 percent in the preceding month. Easing prices in food baskets were the reason for the decline.

“India’s economy has been remarkably resilient to the deteriorating external environment, and strong macroeconomic, fundamentals have placed it in good stead compared to other emerging market economies,” said Auguste Tano Kouame, World Bank’s Country Director in India. “However, continued vigilance is required as adverse global developments persist,” he said.

The report forecasts that the Indian economy will grow at a slightly lower rate at 6.6 percent in the 2023-24 fiscal year. A challenging external environment will affect India’s economic outlook through different channels. The report states that rapid monetary policy tightening in advanced economies has already resulted in large portfolio outflows and depreciation of the Indian Rupee while high global commodity prices have led to a widening of the current account deficit.

India’s external position has also improved considerably over the past decade. The current account deficit is adequately financed by improving foreign direct investment inflows and a solid cushion of foreign exchange reserves. (ANI)

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77 anniversary of Independence India Rupee

Rupee Fared Better Among Emerging Mkt Currencies: World Bank

By LokMarg

Indian Rupee has fared relatively well in 2022 in comparison to other emerging market peers, senior World Bank economist Dhruv Sharma said Tuesday after the global financial body revised India’s GDP forecast to 6.9 percent.

“The Rupee has depreciated just about 10 percent over the course of this year. That might sound like a large number, but relative to many other emerging market peers, India hasn’t fared that badly,” Sharma told a press briefing today after the launch of the World Bank’s India Development Update titled “Navigating the Storm”.

For the record, the rupee has come substantially off its all-time low. Currently, it is trading around 82.0 against the US Dollar as against a record low of 83 it breached in mid-October. Tightening monetary policy by the US Federal Reserve and central banks in other advanced economies triggered the depreciation of the Indian currency.

An increase in policy rates in the US and other advanced economies typically leads to a depreciation of the Rupee.

The US Federal Reserve has been raising key interest rates in its fight against red-hot inflation in the country. It raised the key policy rate by 75 basis points to over a decade high at 3.75-4.0 percent, the fourth consecutive hike of such magnitude.

Back home, the Reserve Bank of India had already hiked the key policy rate by 190 basis points since May to 5.9 percent to cool off domestic retail inflation that has stayed above the RBI’s upper tolerance limit for over three quarters now.

The World Bank has revised India’s 2022-23 GDP growth forecast upward to 6.9 percent from the earlier estimate of 6.5 percent, due to robust economic activities.

“India is more resilient now than it was 10 years ago. All steps taken over the past 10 years are helping India navigate the global headwinds,” said Sharma.

“Indian economy has rebounded fairly robustly following the contraction that occurred during the pandemic year. India performed quite well relative to other large emerging market economies, and this story of the rebound has been largely driven by robust domestic demand, and consumption investment,” the World Bank economist said.

On rising inflation in India, Sharma said it was driven by the supply side as well as external factors.

In October, retail inflation was 6.77 percent as against 7.41 percent the previous month. (ANI)

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