World Bank downgrades India's growth rate by 0.2%, predicts 7.6% growth

Washington: The World Bank has marginally downgraded India's growth rate to 7.6 percent in 2016 even as it said the country will continue to grow faster than its large emerging market peers.

The bank in its latest 'Global Economic Prospects' report downgraded its 2016 global growth forecast to 2.4 percent from the 2.9 percent pace projected in January.

India's growth too has been downgraded marginally by 0.2 percent, while that of China remains the same and pegged the Communist nation at 6.7 percent.

The bank also modified its projections for India's growth rate in 2017 and 2018 by a marginal down gradation of 0.2 percent to 7.7 percent growth in both the years.

"India will continue to grow faster than its large emerging market peers, with growth rates of 7.6-7.7 percent from Fiscal Year 2016/17 to Fiscal Year 2018/19," it said.

The bank said half a point down grade in the global growth was due to sluggish growth in advanced economies, stubbornly low commodity prices, weak global trade and diminishing capital flows.

"This sluggish growth underscores why it's critically important for countries to pursue policies that will boost economic growth and improve the lives of those living in extreme poverty," World Bank Group President Jim Yong Kim said in a statement.

"Economic growth remains the most important driver of poverty reduction, and that's why we're very concerned that growth is slowing sharply in commodity-exporting developing countries due to depressed commodity prices," Jim said.

The bank said that growth in India picked up to 7.6 percent in Fiscal Year 2015/16, a 0.4 percentage point increase over Fiscal Year 2014/15, driven largely by domestic demand.

"Partly thanks to the ongoing liberalisation of India's foreign direct investment (FDI) regime, FDI to India surged 37 percent from the launch of the 'Make in India' campaign in October 2014 to February 2016, with the computer software and automotive sectors attracting the bulk of this investment," the report said.

"Manufacturing activity, though dampened by weak external demand, accelerated 9.3 per cent in the final quarter of Fiscal Year 15/16. Relative to other large emerging economies, purchasing manager indices for India reflect more buoyant sentiment. Business start-ups are on the rise, particularly in the e-commerce and financial services sector," it said.