NEW DELHI: A World Bank analysis released on Tuesday predicts that India's GDP will decline to 6.3% in 2023–2024 from its earlier projection of 6.6%, primarily due to decreased consumption brought on by increased borrowing rates.
The Central Bank of India has been raising interest rates since May of last year in an effort to curb inflation.
The World Bank stated in its "India Development Update" that slow consumption growth combined with difficult external circumstances will likely have an influence on economic growth.
Government spending is anticipated to rise at a slower rate as a result of the withdrawal of pandemic-related fiscal assistance measures, it said. "Higher borrowing costs and slower income growth will weigh on private consumption growth," it added.
The research predicts that India's current account deficit will also likely decrease, from 3% in 2022–2023 to 2.1% in 2023–2024.
On inflation, the World Bank report said that it is expected to ease to 5.2 percent in the current fiscal as against 6.6 percent in the previous fiscal.
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