World Bank’s India Economic Update estimated 8.5 to 9 per cent Growth

The World Bank released India Economic Update on 22 February 2011. The update re-established the possibility of a robust economic growth and highlighted that India is set to regain its pre-crisis growth trend of around 8.5 to 9 per cent in 2011 and the forthcoming financial years.

The growth projection made by the World Bank is in line with those made by the Prime Minister’s Economic Advisory Council (PMEAC) which estimated expansion of the economy by 8.6 per cent in 2010-11 and 9 per cent in 2011-12. The World Bank also opined that inflation is likely to ease to 7 per cent by March end 2011. The prediction is coupled with a warning. The World Bank warned that uncertainty over international commodity prices would continue to persist. Also it warned that the central bank will continue with its monetary tightening policy.

 In its report, the World Bank analysed whether core inflation is caused by more general demand pressures or by second round effects of earlier food and commodity price shocks. The PMEAC in its review of the Economy 2010-11 had revised upwards its inflation forecast to 7 per cent by March-end from earlier estimate of 6.5 per cent.

The World Bank in its Economic Update called for containing of the fiscal and revenue deficits as well as the speedy implementation of the goods and services tax (GST).