India expected to grow at 6.5% in FY22-23: World Bank

The Indian economy is expected to speed up to 7.0% in the next fiscal year, before settling back down to 6.1% in FY24-25

The World Bank has estimated that India will grow 6.5% in the current fiscal year (FY22-23), after having grown at 8.7% in the fiscal year ended March 31.

The estimate for the current year was revised downwards by one percentage point since June due to persistent pressures. The Indian economy is expected to speed up to 7.0% in the next fiscal year, before settling back down to 6.1% in FY24-25.  

The numbers were released as part of the World Bank’s twice yearly South Asia Economic Focus, titled, ‘Coping with Shocks: Migration and the Road to Resilience’, ahead of the World Bank IMF annual meetings in Washington DC.

With Sri Lanka’s economic crisis, the devastating floods in Pakistan, and recovery from the pandemic impacted by the war in Ukraine, recovery in the region will be uneven, with the economies that are more services-led (India, Nepal, and Maldives) expected to “maintain a reasonable recovery trend despite headwinds”.  

Afghanistan, Sri Lanka and Pakistan are more at risk and will see poverty increase in 2022.

The slowing in India’s growth during the current fiscal year, relative to the previous one, was because most of the COVID recovery happened last year, the report said. The impact of the Russia-Ukraine war, global monetary tightening, high commodity prices and interest rates impacting domestic demand (especially private consumption in FY2023-24), contributing to this slowing.

Manufacturing and services have been expanding in India since January, and growing at a rate faster than the rest of the world. With a relaxing of COVID restrictions, economic activity had picked up, as had demand in contact-intensive sectors.