New Delhi: Noting that downside risks to Indian economic growth are
high, the World Bank today projected the country's GDP to expand 7-7.5 per
cent in 2012-13. "In India, the slowdown in GDP growth witnessed over the
last two quarters is likely to extend into the coming fiscal year because
of the weakness in investment," the World Bank said in its latest economic
update for India.
According to the multilateral lender, the country is expected to see a
growth of 7-7.5 per cent in the current as well as next financial years, a
sharp slowdown "from 9-10 per cent growth in the run-up to the global
"The downside risks to growth are high because of the risks to global
growth from the precarious situation in Europe," it noted. As per official
estimates, the Indian economy is likely to expand 6.9 per cent in the
current fiscal, much lower than 9 per cent projected during the 2011-12
Budget. Pointing out that slowdown is at least partly caused by structural
problems, the World Bank said that there is a need to overcome the same by
enhancing domestic growth drivers.
"Important signals could
come from the reform of direct taxes, the implementation of the
long-delayed GST, and passage of the land acquisition and mining bills,"
it added. Tighter macroeconomic policies, slow growth in the core OECD
countries and worries about another global recession, among others also
weigh down on growth, the report said.
"The central government is
likely to miss the ambitious target for fiscal consolidation it had set in
the FY 2011-12 budget by about 1 per cent of GDP. "Slippages are due to
lower-than-expected revenues and increasing outlays on subsidies, which
had been given low budgetary allocations in anticipation of strong policy
changes, which failed to materialise," it added.