Growth in India projected to 'decelerate' to 11-year low of 5% in 2019-2020: World Bank
Washington, Jan 9: India's growth rate is projected to decelerate to five per cent in 2019-20 amid enduring financial sector issues, according to a World Bank report, which said the country's GDP was likely to recover to 5.8 per cent in the following financial year.
India's GDP growth is seen dipping to an 11-year low of 5 per cent in the current fiscal, mainly due to poor showing by manufacturing and construction sectors, government data showed on Tuesday.
"In India, where weakness in credit from non-bank financial companies is expected to linger, growth is projected to slow to five per cent in fiscal year 2019/20, which ends March 31 and recover to 5.8 per cent the following fiscal year," the Bank said in its latest edition of the Global Economic Prospects on Wednesday.
It said tighter credit conditions in the non-banking sector are contributing to a substantial weakening of the domestic demand in India.
"In India, activity was constrained by insufficient credit availability, as well as by subdued private consumption," the report stated.
The Bank said the regional growth in South Asia is expected to pick up gradually, to six per cent in 2022, on the assumption of a modest rebound in domestic demand.
"Growth in India is projected to decelerate to five per cent in FY(financial year) 2019/20 amid enduring financial sector issues," the WB report said.
It said key risks to the outlook include a sharper-than-expected slowdown in major economies, a re-escalation of regional geopolitical tensions, and a setback in reforms to address impaired balance sheets in the financial and corporate sectors.
In India, economic activity slowed substantially in 2019, with the deceleration most pronounced in the manufacturing and agriculture sectors, whereas government-related services sub-sectors received significant support from public spending, the Bank said.
GDP growth decelerated to five per cent and 4.5 per cent in the April-June and July-September quarters of 2019, respectively, the lowest readings since 2013, it said.
Sharp slowdowns in household consumption and investment onset, the rise in government spending. High-frequency data suggest that activity continued to be weak for the rest of 2019, the Bank said.
The Bank, in the report, praised India's efforts to gradually eliminate subsidies on LPG. In India, starting in 2012, the government reformed its subsidy regime for liquified petroleum gas (LPG).
LPG subsidies to households encouraged the formation of black markets where subsidised LPG distributed to households was diverted to the commercial sector.
The government gradually increased the price of LPG for households while implementing a large-scale targeted cash transfer mechanism, it said.
"The programme successfully eliminated distortions in the LPG market, with limited adverse consequences for the poor, and the fiscal savings obtained from the reduction in subsidies fully offset the costs of the targeted cash transfer," the report stated.
In its report, the Bank said the global economic growth is forecast to edge up to 2.5 per cent in 2020 as investment and trade gradually recover from last year's significant weakness but downward risks persist.
America's growth is forecast to slow to 1.8 per cent this year, reflecting the negative impact of earlier tariff increases and elevated uncertainty. Euro Area growth is projected to slip to a downwardly revised one per cent in 2020 amid weak industrial activity, it said.
The growth rate for Bangladesh has been projected to remain above seven per cent through the forecast horizon and, in Pakistan, it is projected to languish at three per cent or less through 2020 as macroeconomic stabilisation efforts weigh on economic activity, the Bank said.
"With the growth in emerging and developing economies likely to remain slow, policymakers should seize the opportunity to undertake structural reforms that boost broad-based growth, which is essential to poverty reduction," the World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu, said.
"Steps to improve the business climate, the rule of law, debt management, and productivity can help achieve sustained growth," Pazarbasioglu said.
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Om Birla attends swearing-in of new B'desh PM, says India stands ready to support BNP govt
New Delhi (PTI): Lok Sabha Speaker Om Birla on Tuesday attended the swearing-in ceremony of new Bangladesh Prime Minister Tarique Rahman in Dhaka, and said India stands ready to support Bangladesh's endeavours to build a democratic, progressive and inclusive nation.
Separately, the speaker called on the new Bangladesh prime minister and conveyed the wishes of Prime Minister Narendra Modi.
He also handed over an invitation from Prime Minister Modi to Rahman to visit India, officials said here.
“Glad to attend the swearing-in ceremony of the new government of Bangladesh led by Prime Minister Tarique Rahman in Dhaka today. India stands ready to support Bangladesh’s endeavours to build a democratic, progressive and inclusive nation,” Birla posted on X.
Bangladesh High Commissioner to India, Riaz Hamidullah, said in a post on X, “Prime Minister Tarique Rahman conveys his greetings to India and PM Narendra Modi to the visiting India Lok Sabha Speaker Om Birla at a courtesy meet following the swearing-in of the new government.
“Speaker Birla conveyed wishes and an invitation to India. Both leaders expressed optimism to work together for the well-being of the people of Bangladesh and India, pursuing a people-centric menu of cooperation.”
Birla also met Maldives President Mohamed Muizzu, Bhutan Prime Minister Tshering Tobgay and other leaders on the sidelines of the event.
Led by Rahman, the Bangladesh Nationalist Party (BNP) swept to power with a two-thirds majority with 49.97 per cent votes and 209 seats in the polls held on February 12, results for which were declared on February 13.
The Jamaat-e-Islami, which was opposed to Bangladesh's independence from Pakistan in 1971, registered its best-ever performance with 31.76 per cent votes and 68 seats.
The National Citizen Party (NCP) secured the third-highest number of seats, six, and 3.05 per cent votes.
Bangladesh had invited Narendra Modi to the ceremony, but the prime minister could not attend the event as he was scheduled to hold talks with French President Emmanuel Macron in Mumbai on Tuesday.
On reaching Dhaka, Birla said the swearing-in of Rahman was an important moment that would strengthen people-to-people relations and shared democratic values between the two neighbours.
“Honoured to be in Dhaka representing India at the swearing-in ceremony of the new government led by Tarique Rahman as the prime minister. It's an important moment that will strengthen people-to-people ties and shared democratic values between our two nations,” Birla said.
Birla was accompanied by Foreign Secretary Vikram Misri and other officials.
