The World Bank on Wednesday lowered India’s growth forecast for FY26 to 6.3 per cent due to an “increasingly challenging global environment”. The World Bank has cut its previous forecast for October 2024 by 40 basis points.
According to the World Bank’s South Asia Development Update report, “The benefits to private investment from monetary easing and regulatory easing are likely to be offset by global economic weakness and policy uncertainty.”
It said export demand will remain subdued due to trade policy changes and sluggish global growth. Tax cuts are expected to boost private consumption, and better implementation of the public-private partnership scheme should boost government investment.
According to Martin Raiser, World Bank’s Asia Vice President, “South Asian countries have limited resources to deal with the increasingly challenging global environment due to the many shocks they have faced in the past decade.” He said, “The region needs targeted reforms to deal with the weak fiscal situation, backward agricultural sectors, and the risks posed by climate shocks.”
According to the World Bank’s ‘Taxing Times’ report, India’s growth forecast has been reduced to 6.5 percent for FY25. The World Bank said in the regional scenario that accelerating domestic revenue mobilization can help strengthen the region’s fragile fiscal position and increase resilience to future shocks. The report said that India’s equity market has grown rapidly in recent years. This market has increased both in terms of listing and valuation.
This market has attracted a significant amount of funds, especially while volatility and net supply persist. According to the report, ‘The stock market valuation has reached a correction level after reaching its peak last year.