The World Bank has scaled down India's economic growth rate forecast to a dismal 4% for 2009-10, down from an estimated 5.5%.
The World Bank has scaled down India's economic growth rate forecast to a dismal four per cent for 2009-10, down from an estimated 5.5 per cent for the fiscal that ends on Tuesday.
India, according to the World Bank's Global Economic Prospects 2009 released ahead of the G-20 meeting in London, could witness some recovery in 2010-11 with growth likely to bounce to 7 per cent.
The World Bank in November last year had projected a growth rate of 5.8 per cent for 2009-10, which is now being scaled down due to worsening of the global financial crisis. As regards the global economy, the World Bank report said, it could shrink by 1.7 per cent in 2009 as against the growth of 0.9 per cent estimated in November.
The recovery in the global economy, according to the latest projections, was likely to take place in 2010 which may witness increase in the world output by 2.3 per cent. As far as the 2008-09 is concerned, the Indian economy was likely to grow only by 5.5 per cent, much below 7.1 per cent estimated by the Central Statistical Organisation (CSO) in February.
The World Bank report also projected 6.1 per cent decline in the global trade in 2009, a forecast that will have implications for India's exports which has been shrinking since October.
Referring to the impact of deepening global crisis on the developing countries, the World Bank report said, "The reversal of capital flows, collapse in stock markets, and in general deterioration in financing conditions have brought investment growth in the developing countries to a halt."
In many developing countries, it added, the investment is sharply declining. In South Asia as a whole, the growth rate is expected to decline to 3.7 per cent in 2009 as compared to 5.6 per cent in the previous year.
Although terms of trade have moved in favour of the South Asian region on account of declining oil prices, the report said, "Weakening of demand in export markets is being
felt sharply, as is a tempering of services exports from India's high-tech centres, as capital spending wanes globally."
According to the World Bank report, rising budget deficits would impair the ability of the governments to provide fiscal stimulus to boost slowing economies.
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