India to grow at 6.7% for next 2 fiscal years: World Bank

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Washington: India’s economic growth is projected to remain steady at 6.7 per cent per annum for the next the two fiscals beginning April 2025, according to the World Bank’s latest growth estimates for South Asia.

Growth in South Asia is expected to rise to 6.2 per cent in 2025-26, with the projected firm growth in India, the World Bank said on Thursday.

“In India, growth is projected to remain steady, at 6.7 per cent a year for the two fiscal years beginning in April 2025,” it said.

“The services sector is expected to enjoy sustained expansion, and manufacturing activity will strengthen, supported by government initiatives to improve the business environment. Investment growth is projected to be steady, with moderating public investment offset by rising private investment,” the bank said.

Growth in India is projected to soften to 6.5 per cent in fiscal year 2024/25 (April 2024 to March 2025), reflecting a slowdown in investment and weak manufacturing growth, it said.

“However, private consumption growth has remained resilient, primarily driven by improved rural incomes accompanied by a recovery of agricultural output,” the World Bank said.

Excluding India, growth in the region is estimated to have picked up to 3.9 per cent in 2024, mainly reflecting recoveries in Pakistan and Sri Lanka, supported by improved macroeconomic policies that were adopted to address earlier economic difficulties.

“In Bangladesh, political turmoil in mid-2024 weighed on activity and deteriorated investor confidence. Supply constraints, reflecting energy shortages and import restrictions, weakened industrial activity and led to increased price pressures,” the report said.

Growth in the region excluding India is set to strengthen to four per cent in 2025 and to 4.3 per cent in 2026, though the forecast for this year is slightly lower than in June mainly due to a downgrade for Bangladesh amid economic and policy uncertainty, it said.

In Bangladesh, growth is forecast to decline to 4.1 per cent in FY2024/25 (July 2024 to June 2025), before picking up to 5.4 per cent in FY2025/26.

Amid heightened political uncertainty, investment and industrial activity are expected to remain subdued in the near term, it said.

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