New Delhi, October 13: The World Bank has said that India’s growth rate is likely to fall to 6% as the economy battles a slowdown. The growth rate stood at 6.9% in 2018-2019.
The World Bank though said that GDP growth rate was expected to gradually recover to 6.9%t in 2021 and 7.2% in 2022. The ‘South Asia Economic Focus’ report said growth will recover as rural demand benefits from effects of income support schemes, results of tax incentives and credit growth resumes.
“Exports growth is expected to remain modest, as trade wars and slow global growth depresses external demand,” the report added.
In the quarter ended June, India’s GDP growth slowed down to 5%. This is the slowest pace in which the economy has expanded since March 2013, when the growth rate was 4.7%. The slowing down of household, which also affected other sectors, demand was one of the major factors for the decline
The World Bank noted that growth decelerated for the second consecutive year and pointed out to the widening current account deficit. India’s current account deficit, a parameter which reflects the trade balance, was 2.1% of the GDP in 2018-19 from the 1.8% a year earlier.
The industrial output figures for August showed that output shrank by 1.1%, it had seen a growth of 4.2% a month ago. Earlier this month, data showed that the output of eight core sector industries that constitute about 40% of Index of industrial production recorded a 0.5% decline in August.
The auto industry is experiencing a hard time. In September, car sales slumped to 23.7%, the eleventh straight month of decline.
The government is working on several policies to boost the sluggish economy. Finance minister Nirmala Sitharaman has already announced five rounds of fiscal, administrative and policy measures to stimulate the economy since August 23. The biggest among these was the slasing of the corporate tax rates.
The Reserve Bank of India cut policy rates by 25 basis points this month and the central bank said it will continue its accommodative stance to revive growth. (Agencies)