World Bank has forecasted a slower 7-8% growth rate in next couple of years for the Indian economy. Gone are those days of near double-digit growth rate in the domestically-fired Indian economy. Indian economy grew by 8.5% in the fiscal 2010-11.

world-bank

However, the World Bank expects inflation to ease in the October-December quarter of this fiscal, which would bring an end to RBI’s efforts to hike interest rates further and gradually dip south wards in the ensuing period.

The World Bank has pegged lower Indian growth at 7-8% for FY 2010-11 and FY 2011-12, on the back of higher interest rates, uncertain investment climate and base effect of strong agricultural rebound in the last fiscal year.

Moreover, the World Bank also raised concerns towards country’s apprehensive policy towards land acquisition laws, regulatory hurdles over environment clearances, uncertainty on the prospects of mining sector, power projects hit by coal and fuel linkages and tax reform movements.

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One Response to World Bank cuts Indian growth forecast to 7-8%

  1. My guess is the griwth will be around 4 to 5 percent.
    Logic of my guess is :
    1) Last year agri growth was bumper (compared to previous year where there was less rain fall). So compared to last year’s bumper growth, this year even if we maintain same bumper food production, growth will be zero. If we perform even better than the bumper performance of last year, then only agri growth will have some thing to show.
    2) Mining sector which is a major contributer to Industrial growth index is in fact negetive. (Gas production is going down, iron ore mining reduced by 30% compared to last year, coal mining facing environmental problems)
    3) Due to uncertainity in West, service sector will suffer. (At the most they can maintain same numbers so the growth will be zero)
    4) Infrastructure sector is suffering becasue of high interest rates.

    With all these, growth will not be more than 5 percent.

    Just my two paisa 🙂

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