According to World Bank latest report on South Asia, India's GDP growth is expected to accelerate moderately to 7.5% in fiscal year 2019-20. It will be driven by continued investment strengthening-particularly private, improved export performance and resilient consumption. The report came ahead of spring meeting of World Bank and International Monetary Fund (IMF).
- The real GDP growth was estimated at 7.2% in financial year 2018-19. Data for first three quarters suggest that growth was broad-based.
- Industrial growth accelerated to 7.9%, making up for a deceleration in services. Besides, agriculture growth was robust at 4%.
- On the demand side, domestic consumption remained primary growth driver. Moreover, gross fixed capital formation and exports both also made growing contributions.
- Over last quarter, growth is expected to remain balanced across sectors. Inflation dynamics also have been subdued over most of FY18/19.
- India's GDP growth is expected to accelerate moderately to 7.5% in FY19/20/ With robust growth, and food prices poised to recover, inflation is expected to converge toward 4%.
- Moreover, both the current account and the fiscal deficit are expected to narrow. On the external front, improvements in India's export performance and low oil prices will also bring about reduction in CAD to 1.9% of GDP.
- On the internal front, consolidated fiscal deficit is projected to decline, albeit slowly (to 6.2 and 6.0% of GDP in FY19/20 and FY20/21 respectively).
- As center's deficit is budgeted to remain unchanged at 3.4% of GDP in FY19/20, burden of adjustment will rest on states.
- There is steady decline in inflation due to sustained decline in food prices since July 2018, subsequently complemented by softening of oil prices and concomitant appreciation of the rupee.