The World Bank’s recent review of the Indian economy has painted a promising picture, highlighting the country’s resilience and robust growth despite global uncertainties.

India’s Economic Resilience

India, with a population of more than 1.4 billion, is the world’s largest democracy. Over the past decade, the country’s integration into the global economy has been accompanied by significant economic growth. Today, India is one of the fastest-growing economies in the world. Despite some signs of moderation, India’s growth remains robust, estimated at 6.9% for the full year, with real GDP growing 7.7% year-on-year during the first three quarters of the fiscal year 2022/23.

Achievements and Challenges

The growth of the past two decades has led to India making remarkable progress in reducing extreme poverty. Between 2011 and 2019, the country is estimated to have halved the share of the population living in extreme poverty. However, the pace of poverty reduction has slowed, especially during the COVID-19 pandemic.

Inequality in consumption continues, with a Gini index of around 35 over the past two decades. Child malnutrition has remained high, with 35.5 percent of children under the age of 5 years being stunted. Concerns remain about the quality of jobs created and the real growth in wages, as well as around the low participation of women in the labor force.

Future Outlook

India’s aspiration to achieve high-income status by 2047 will need to be realized through a climate-resilient growth process that delivers broad-based gains to the bottom half of the population. Growth-oriented reforms will need to be accompanied by an expansion in good jobs that keeps pace with the number of labor market entrants. At the same time, gaps in economic participation will need to be addressed, including by bringing more women into the workforce.

The World Bank has revised its FY23/24 GDP forecast to 6.3 percent from 6.6 percent (December 2022). Growth is expected to be constrained by slower consumption growth and challenging external conditions. Rising borrowing costs and slower income growth will weigh on private consumption growth, and government consumption is projected to grow at a slower pace due to the withdrawal of pandemic-related fiscal support measures.

Conclusion

Despite the challenges, the World Bank’s review of the Indian economy is largely positive. The country’s robust performance, resilience in the face of global uncertainties, and continued growth trajectory have earned it a thumbs-up from the World Bank. As India continues to navigate its path towards high-income status, it will be crucial to address persistent challenges and ensure that growth is inclusive and sustainable.