New Delhi: A day after raising India’s growth forecast for FY27 to 6.6% from the earlier estimate of 6.3%, the World Bank projected that the country’s economy will grow at an average rate of 7.1% during the financial years 2027-28 and 2028-29.
According to the World Bank, India is in a relatively strong position to deal with the ongoing global energy crisis caused by tensions in the Middle East.
The country’s risks are well cushioned by strong buffers, including high foreign exchange reserves, available fiscal space, and a solidly capitalised banking system, it has said, as reported by timesnow.in.
Aurelien Kruse, the World Bank’s lead economist for India, said the country has managed the current challenges quite effectively, while speaking at an event organised by the National Council of Applied Economic Research (NCAER),
“This is testimony to the fact that the buffers India had at the time of crisis were very strong, and the authorities have struck the right balance between managing supply without resorting to massive rationing,” he said.
While risks from the global energy shock are significant, they are currently tilted more towards the downside, Kruse added, praising the government’s measured approach in handling the situation so far.
The World Bank has also expressed confidence in the trade agreements that India signed recently with the European Union and the United Kingdom.
Franziska Ohnsorge, South Asia Chief Economist, said these pacts could give a meaningful and sustained boost to Indian exports. They are expected to reduce prices for consumers and support household incomes across different income groups.
“These trade agreements are expected to significantly expand market access, potentially increasing the share of global GDP accessible through preferential trade from below 20% to nearly 38%,” Ohnsorge said.
The World Bank, however, sounded a note of caution on industrial policy and employment in South Asia. Ohnsorge noted that countries in the region, including India, have been using industrial policies for the past decade to create more and better jobs, particularly in manufacturing. However, the results have been mixed.
“Inward restricting policies have restricted imports significantly over several years, but export promoting policies have not significantly promoted exports,” she observed.
It is becoming increasingly difficult for countries in the region to generate quality employment opportunities, Ohnsorge highlighted. With around 28 crore young people expected to enter the workforce over the next 10-15 years, the pressure to create good jobs will only grow.
She suggested that one way forward is to remove unnecessary obstacles in the adoption of Artificial Intelligence and other new technologies. If businesses are allowed to make productive use of AI, it can help generate more and better jobs in the coming years, she insisted.
