India’s growth set to accelerate: World Bank

Growth in India is firming up and projected to accelerate to 7.3 per cent in the 2018-19 fiscal year and 7.5 per cent in the next two years, the World Bank said on Sunday.

The global lender said that the Indian economy appears to have recovered from the temporary disruptions caused by demonetisation and the introduction of the Goods and Services Tax (GST).

However, domestic risks and a less benign external environment impact the macro-economic outlook, it said.

Growth reached 6.7 per cent in fiscal year 2017-18, with a significant acceleration in recent months, it said.

“Prompted by the adoption of the ' Goods and Services Tax (GST) and the recapitalisation of banks, growth in India is firming up and it is projected to accelerate further,” the World bank said in its latest report on South Asia. Growth in India, it said, is expected to rise to 7.3 per cent in fiscal year 2018/19, and to 7.5 per cent in the following two years, with stronger private spending and export growth as the key drivers.

On the production side, the turnaround in the second half was led by manufacturing (that grew at 8.8 per cent versus 2.7 per cent in the first half). Agriculture growth improved, and services growth held steady at 7.7 per cent, the report said.

On the demand side, the pick-up in growth was reflected in a sharp acceleration in gross fixed capital formation to 11.7 per cent in the second half, from 3.4 per cent in the first.

Consumption, growing at seven per cent in the second half, remained the major driver of growth, the report said.