Navigating the Storm

Navigating the Storm

Why in News?

  • Recently, The World Bank (WB) in its India Development Report titled ‘Navigating the Storm’, upgraded its growth forecast for India’s economy in 2022-23 to 6.9%.

Highlights

  • The Bank expects the Indian economy to grow at a slightly slower 6.6% in 2023-24 as a challenging external environment and faltering global growth will affect its economic outlook through different channels.
  • India’s resilience in economic activity despite a deteriorating external environment.
  • India’s economy has been remarkably resilient to the deteriorating external environment, and strong macroeconomic fundamentals have placed it in good stead compared to other emerging market economies.
  • Strong private consumption and investment.
  • The government’s focus on bolstering capital expenditure also supported domestic demand in the first half of 2022-23.
  • India has a large domestic market and is relatively less exposed to international trade flows
  • Continued robust growth of domestic demand at the start of Q3 (October to December quarter), 2022-23.
  • A well-crafted and prudent policy response to global spillovers is helping India navigate global and domestic challenges.
  • The Impact of a tightening global monetary policy cycle, slowing global growth and elevated commodity prices (inflation) and rising borrowing costs will affect domestic demand, particularly private consumption in FY2023/24, while slowing global growth will inhibit growth in demand for India’s exports. These factors mean that the Indian economy will experience lower growth in FY23 compared to FY22.
  • The renewable energy and green economy sectors can create a lot of jobs.
  • It cautions about trade-offs between trying to limit the adverse impact of global spillovers on growth and the available policy space.
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