World Bank gives boost to India growth story, revises FY25 GDP forecast from 6.6% to 7%

The World Bank, on Tuesday (September 3), revised India’s gross domestic product growth forecast for the financial year 2025 upwards.

The international financial institution has a given a boost to the India growth story by raising the country’s growth forecast from 6.6 per cent earlier to seven per cent now for the current fiscal.

The World Bank also noted that the Indian economy’s growth will remain strong over the medium term.

Slowdown in April-June quarter

Notably, in the April-June quarter, India’s GDP growth slowed to 6.7 per cent owing to a decline in government spending as a Model Code of Conduct was put in place for the General elections, government data showed on August 30.

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Despite the revision, the World Bank’s outlook for the Indian economy remains less optimistic than that of the country’s central bank.

Reserve Bank of India (RBI) governor Shaktikanta Das, following the latest Monetary Policy Committee (MPC) meeting in August, said that the bank forecasts India’s GDP to grow 7.2 per cent in FY25.

Varying forecasts for India’s GDP growth

Last week, after India’s economic growth for the April-June quarter of 2024 came in at a 15-month-low at 6.7 per cent, Das said that the slowdown was due to reduced government spending because of the enforcement of the model code of conduct during the Lok Sabha elections.

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Following this deceleration, global brokerage house Nomura, in a note, said, “Overall, Q2 GDP data are weaker than expected, although the role of transitory factors like elections versus more persistent factors like slowing profit growth is still unclear.” Nevertheless, it cut India’s GDP growth forecast for FY25 from 6.9 per cent to 6.7 per cent.

On a comparative note, that forecast for India still lies on the more optimistic side. United States-based global banks Goldman Sachs and JP Morgan have maintained their FY25 GDP forecast for Asia’s third-largest and the world’s fifth-largest economy at 6.5 per cent.

With inputs from Reuters