New Delhi: The World Bank on Thursday maintained its growth forecast for India in 2015-16 at 7.5 percent, while lowering marginally the projection for 2016-17 to 7.8 percent, and for 2017-18 to 7.9 percent. "However, acceleration in growth is conditional on the growth rate of investment picking up to 8.8 percent during FY 2016-FY 2018," the bank said in its latest India Development Update released here.
"While growth will very likely remain above 7 percent in the next fiscal year, there is significant uncertainty about the momentum of the economy," it added. The earlier bi-annual update, released in April, had estimated gross domestic product (GDP) growth at 7.9 percent next fiscal and at 8 percent in 2017-18.
According to the World Bank, resources from lower subsidies and higher taxes has been well utilized in lowering deficits and increasing capital expenditure. "Current account deficit narrowed 3.4 percentage points between financial year 12-13 and FY 14-15 and capital expenditure increased by one third in the first six months of calendar 2015 compared to the previous year," the update said.
Noting that India had lost market share in exports, the report said although the country may be able to achieve fast GDP growth without export growth for a short period, sustaining high rates of GDP growth over a longer period will require a recovery of export growth.
Though India is well positioned to weather the global volatility in the near term, it will not remain immune to a slowdown in global demand and heightened volatility in the medium term, the bank said. "The two major changes since our earlier update are that capital expenditure has increased and the external environment has worsened," Onno Ruhl, country director World Bank India, told reporters here.
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