World Bank projects India's growth in FY2013 to be 5.7 p.c.

WASHINGTON, USA: Growth in India is projected to rise to 5.7 per cent in the 2013 fiscal year and to 6.5 per cent and 6.7 per cent in FY2014 and FY2015, respectively, according to a newly released World Bank report.

GDP growth in South Asia as a whole slipped to 4.8 per cent in 2012, mainly reflecting a continued deceleration in India, slower growth in Sri Lanka and Bangladesh, and sluggish growth in Pakistan and Nepal.

Regional GDP growth is projected to pick up to 5.2 per cent in 2013, before accelerating to 6.0 per cent and 6.4 per cent in 2014 and 2015, in line with strengthening external demand, normal monsoons, and a gradual pick-up in investment spending, the Bank's Global Economic Prospects (GEP) report said.

"Continued progress in fiscal consolidation and in reducing structural constraints will determine the pace of recovery," it said noting, "domestic risks dominate, including a possible derailing of reforms, and weaker than expected monsoon rains."

Expecting muted global growth, led by developing world, the report said risks from advanced economies have eased and growth is firming, despite ongoing contraction in the Euro Area, "However, the pick-up in developing countries will be modest because of capacity constraints in several middle income countries."

Global GDP is expected to expand about 2.2 per cent this year and strengthen to 3.0 per cent and 3.3 per cent in 2014 and 2015.

Developing-country GDP is now projected to be around 5.1 per cent in 2013, strengthening to 5.6 per cent and 5.7 per cent in 2014 and 2015, respectively.

Highlighting that growth in Brazil, India, Russia, South Africa and Turkey has been held back by supply bottlenecks, the report said: "While external risks have eased, growth in these countries is unlikely to reach pre-crisis rates, unless supply-side reforms are completed."

"While there are markers of hope in the financial sector, the slowdown in the real economy is turning out to be unusually protracted," Kaushik Basu, senior vice-president and chief economist at the World Bank.

"This is reflected in the stubbornly high unemployment in industrialized nations, with unemployment in the Eurozone actually rising, and in the slowing growth in emerging economies, with India's annual growth having dropped below 6 per cent for the first time in 10 years."