January 9th, 2020 / 3:42 PM
/ Updated 3 hours ago
Image Credit:IndiaTV News
A day after the country’s statistics office pegged India’s GDP growth to an 11-year low at 5 percent for the current fiscal year, the World Bank has also cut its growth forecast to 5 percent from its earlier estimated 6 percent for the fiscal year 2020-21.
World Bank’s January 2020 Global Economic Prospects report, released on Wednesday, points at a “lingering” credit weakness emerging from non-banking financial companies (NBFCs) as one of the key reasons for the downfall.
This is the second-lowest for India after 2008-09, the year that suffered a global financial crisis and recorded the growth at 3.1 percent.
Its projection for India’s GDP in 2021-22 has also dropped drastically to just 5.8 percent, highlighting that the economic revival could take longer than previously expected. This report is a matter of concern for an economy that aims at becoming a $5 trillion economy by 2025. The report, therefore, focuses on an increase in domestic demand to reach the $5 trillion economy goal.
“India, where weakness in credit from non-bank financial companies is expected to linger, growth is projected to slow to 5 percent in FY 2019-20, which ends March 31 and recover to 5.8 per cent the following fiscal year,” said the World Bank in its report.
This prediction is also in line with the Reserve Bank of India (RBI), which pegged the country’s GDP at 5 percent for the current fiscal year in December 2019.
The World Bank has also predicted a drop in the growth of advanced economies to 1.4 percent, pointing at major economies like the US and countries that will face a slowdown.
Commenting on the findings of the report, World Bank Group Vice-President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu said that policymakers should focus on broad-based growth through structural reforms and reduce overall poverty levels.
The report also showed that Pakistan’s growth is expected to rise to three percent while Sri Lanka’s GDP is expected to rise to 3.3 percent. Bangladesh, however, seems to perform well as its GDP is predicted to rise to 7.2 percent.
As the GDP growth rates continue to fall miserably, all eyes will now be on the Union Budget as the government is expected to introduce measures to boost private consumption and demand.
Also Read:GDP Growth For This Year At 5%, Slowest In 11 Years
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Written by : Navya Singh
Edited by : Prateek Gautam