Question: What is the estimated growth rate of India in 2019 fiscal as per latest edition of the biannual South Asia Economic Focus report?
- On 13 October 2019, World Bank has released its biannual report on South Asia economic scenario titled as South Asia Economic Focus, Fall 2019: Making (De)centralization Work.
- The report warns South Asian countries to judiciously perform decentralization works as it can degenerate into fragmentation if not properly managed.
- In its report,World Bank has estimated India’s growth rate to fall to 6 percent for year 2019 after a broad-based deceleration in the initial quarters of this fiscal.
- However, the growth is then expected to gradually recover to 6.9 percent in fiscal year 2020/21 and to 7.2 percent in the following year.
- In 2018-19, the growth rate of the country stood at 6.9 per cent.
- In India, domestic demand has slipped, with private consumption growing 3.1 percent in the last quarter from 7.3 percent a year ago, while manufacturing growth plummeted to below 1 percent in the second quarter of 2019 compared to over 10 percent a year ago.
- In line with a global downward trend, growth in South Asia is projected to slow to 5.9 percent in 2019, down 1.1 percentage points from April 2019 estimates.
- In South Asia,Bangladesh witnessed the highest growth rate of 7.9 percent in 2018 and is estimated to be highest with 8.1 percent in 2019 fiscal.
- The sharp economic slowdown in South Asia is due to the weakened domestic demand, declining industrial production and imports, as well as tensions in the financial markets.
- The report notes that South Asia’s current economic slowdown echoes the decelerating growth and trade slumps of 2008 and 2012.
- With that context, the report remains cautiously optimistic that a slight rebound in investment and private consumption could jumpstart Asia’s growth up to 6.3 percent in 2020, slightly above East Asia and the Pacific, and 6.7 percent in 2021.