India projected to grow at 8% this fiscal: World Bank

It says growth is expected to be slower than projected in South Asia due to Russia’s war on Ukraine

India is projected to grow at 8% over the current fiscal year (April 1- March 31), and 7.1% over the next (FY 2023-24) fiscal year, the World Bank said in its twice yearly South Asia Economic Focus Reshaping Norms: A New Way Forward, released on Wednesday, in the run-up to the World Bank IMF Spring Meetings. The country is estimated to have grown at 8.3% in the fiscal year that just passed, following a contraction of 6.6% in the previous year owing to the COVID-19 pandemic.

For the South Asia region, growth is expected to be slower than projected, by 1 percentage point, at 6.6% in 2022 and 6.3% next calendar year. This is due to Russia’s war on Ukraine, which has impacted the region, when it was already experiencing “uneven and fragile” growth, rising commodity prices, bottlenecks to supply and financial sector vulnerabilities.

The impact of the war so far has been further inflation,  deteriorating current account balances and growing fiscal deficits, according to the report.

“Given these challenges, governments need to carefully plan monetary and fiscal policies to counter external shocks and protect the vulnerable, while laying the foundation for green, resilient and inclusive growth,” Hartwig Schafer, World Bank Vice-President for South Asia, said in a press statement.  

There is limited space for fiscal stimulus and supply bottlenecks are of greater significance than insufficient effective demand, Hans Timmer, World Bank Chief Economist for the South Asia region, told reporters on a briefing call on Wednesday.

Asked what the impact of sanctions on Russia would be on the South Asian region, Mr. Timmer said the impact was indirect, rather than direct, given the relatively low proportion of imports and exports that go to and from Russia and Ukraine. The indirect impact was via the global impact of sanctions on commodity and financial markets.

All countries in the region will face challenges ahead, despite “solid” GDP growth during recovery, as per the report.