India’s gross domestic product (GDP) growth is estimated to be 8.3 percent this fiscal year and 8.7 percent in 2022-23, according to the latest Global Economic Prospects report by World Bank. The upgrade in growth prediction reflects increased private sector and infrastructure investment, as well as rewards from advancing reforms.
This estimate for 2021-22 is identical to the World Bank’s June 2021 assessment, when the country’s growth projection was lowered from 10.1 percent to 8.3% in April owing to the catastrophic impacts of the COVID-19 pandemic’s second wave in the country.
According to the World Bank, the Narendra Modi government’s Production-Linked Incentive (PLI) Scheme is likely to assist India’s economy to grow at 8.7% in the following financial year 2022-23, outpacing emerging market rivals such as China. In the emerging market and developing economies, China, Indonesia, and Bangladesh are predicted to expand at 5.1 percent, 5.2 percent, and 6.4 percent, respectively.
The report said that the Indan economy should benefit from the resumption of contact-intensive services, and ongoing but narrowing monetary and fiscal policy support. It further said that the growth forecast for 2022 has been upgraded to reflect an improving investment outlook with private investment, particularly manufacturing, benefiting from the Production-Linked Incentive (PLI) Scheme, and increases in infrastructure investment.
“The growth outlook will also be supported by ongoing structural reforms, a better than expected financial sector recovery, and measures to resolve financial sector challenges despite ongoing risks,” the report added.
India, as a developing country, has the potential to bridge the market void created by China as it recovers from supply chain debacles and a trade war with the US.
According to World Bank forecasts, India’s GDP would grow to $10 trillion in the next 25 years, said Ministry of External Affairs Secretary (Consular, Passport and Visa, and Overseas Indian Affairs division) Sanjay Bhattacharyya recently. Bhattacharyya spoke on “Role of Diaspora Youth in Azadi Ka Amrit Mahotsav – Innovation and New Technologies” at the Youth Pravasi Bharatiya Diwas Conference 2022.
The PLI Scheme
The Government of India had announced the Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing in April 2020, following the emergence of Covid 19 pandemic in the country. It provides a production-linked incentive to encourage major investments in mobile phone manufacture and certain electronic components, such as Assembly, Testing, Marking, and Packaging (ATMP) facilities, and to increase domestic manufacturing. The Scheme intends to significantly improve the landscape of manufacturing and supply chain enhancement and position India as a global leader in the field.
In the aftermath of the Covid-19 epidemic in 2020, the government announced 13 PLI initiatives to encourage mostly major firms to increase production, strengthen supply chains, and promote exports. Over a five-year period, the overall incentives under the PLI programs, which span industries like telecom, electronics, auto parts, medicine, chemical cells, and textiles, were initially anticipated to be Rs 1.97 lakh crore.
The Global Economic Prospects report by World Bank Group
The World Bank Group’s flagship publication, Global Economic Prospects, analyses global economic changes and prospects, with a particular focus on emerging markets and developing nations. It is published twice a year, once in January and once in June.
Due to ongoing COVID-19 flare-ups, waning policy support, and remaining supply limitations, the report suggests that global recovery is expected to slow significantly. In contrast to advanced countries, production in emerging markets and developing economies (EMDEs) is expected to stay significantly below the pre-pandemic trend for the projected period.
“After rebounding to an estimated 5.5 percent in 2021, global growth is expected to decelerate markedly to 4.1 percent in 2022, reflecting continued COVID-19 flare-ups, diminished fiscal support, and lingering supply bottlenecks. Global growth is projected to soften further to 3.2 percent in 2023, as pent-up demand wanes and supportive macroeconomic policies continue to be unwound.” the World Bank mentioned in the report.
