The World Bank has marginally raised India's growth forecast for the current financial year from its January estimate, going against the tide that has seen many broking houses and international banks cut targets for the current year after GDP growth dropped to a nineyear low of 6.5% in 2011-12.
In its Global Economic Prospects, June 2012, released on Tuesday, the World Bank expects India's economy to expand 6.9% in 2012-13 against its 6.8% forecast in January this year.
The development bank has, however, pared estimates for 2013-14 sharply, pegging it only at 7.2% against 8.5% estimated initially, warning the developing world of a long period of volatility in the global economy. "Growth in India was particularly weak due to monetary policy, stalled reforms and electricity shortages, which along with fiscal and inflation concerns, cut into investment activity," the bank said in its assessment of the South Asia region. It said policy uncertainties, fiscal deficits, entrenched inflation and infrastructure gaps will negatively affect investment activity and limit regional growth.
"India will see growth (measured at factor cost) increasing to 6.9%, 7.2% and 7.4% in fiscal years 2012-13, 2013-14 and 2014-15, respectively," it said. It predicts a modest global GDP growth of 2.5% in 2012, rising to 3% in 2013 and 3.3% in 2014. The banks said resurgence of problems in Europe has eroded the gains made during the first four months of the year that saw a rebound in economic activity in developing and advanced countries.  |
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