Indian economy to grow at 6.1 % in FY14: World Bank

World Bank scaled down India ’s growth forecast to 6.1% for the current fiscal year 2013-14 from 7% projected six months ago. The decline in the growth forecast is largely due to the decline in agriculture sector which is expected to grow at 2% during 2013-14 against the previous estimate of 2.7% despite normal monsoon projection.

However, World Bank notes that India is regaining economic momentum and growth is expected to recover gradually to its high long-term potential. As per the India Development Update of the World Bank, Indian economic growth of 6.1% in 2013-14 is on account of robust domestic demand, strong savings and investment rate. Growth is expected to increase further to 6.7% in 2014-15.

Recent data points to some improvements in economic activity as well. Inflation and trade deficit have come down in recent months, while private consumption and investment growth accelerated in the third quarter of 2012-2013. Moreover, with the stabilisation of the rupee and the expectations of a good monsoon, inflation is expected to decline further in the coming months, according to the report. The fiscal deficit too is expected to decline as the government has renewed its commitment to fiscal consolidation. The current account deficit reached a record high in 2012-13, but is expected to narrow in the medium term.

As per the International Monetary Fund (IMF) report however India ’s GDP is likely to improve to 5.7% during year ending December 2013 and further to 6.2% a year after. In contrast, Prime Minister's Economic Advisory panel has pegged the growth rate for the current fiscal at 6.4%, and according to the Economic Survey 2012-13, India 's GDP growth is expected to be between 6.1%-6.7% in 2013-14.

Growth projections so far:

S.No.	Rating Agency	GDP Growth Projections 2013-14
1	Reserve Bank of India1	6.5%
2	Ministry of Finance, India2	6.1%-6.7%
3	PMEAC, India3	6.4%
4	United Nations4	6.4%
5	World Bank	6.1%
6	Asian Development Bank	6.0%
7	International Monetary Fund5	5.7%

Note: 1) Median forecasts of select macroeconomic indicators by professional forecasters 2013-14

 (Latest round projections)

2) Economic Survey of India 2013-14

3) Primer Ministers Economic Advisory Council

4) & 5) Projection for calendar year ending December 2013

Warm regards,

Dr. S P Sharma

Chief Economist