According to the latest World Bank India Development Update (IDU) report, India is one of the fastest-growing major economies in FY23 at 7.2%. India has persevered in a volatile world. India's growth rate is second among G20 nations and roughly triple emerging market economies' average.

The IDU attributes this excellent performance to public infrastructure investment, financial sector growth, and domestic demand. According to the study, bank credit growth in the first quarter of FY24 was 15.8%, up from 13.3% in FY23.

Due to rising interest rates, geopolitical instability, and slow global demand, the report warned that global issues will endure and intensify. These circumstances may limit global economic growth in the medium term. The World Bank predicts India's GDP growth to slow to 6.3% in FY24 due to external constraints and lower pent-up demand.

Due to weather-related price increases, headline inflation rose to 7.8% in July. The World Bank anticipates inflation to fall due to government actions to boost commodity supplies.

Fiscal consolidation is expected to continue into FY24, with the central government's fiscal deficit falling from 6.4% to 5.9% of GDP. Also, public debt should stabilize at 83% of GDP. Due to foreign investment flows and large foreign reserves, the current account deficit is expected to fall to 1.4% of GDP.

Headline inflation may temporarily limit consumption, but we expect a moderation. Dhruv Sharma, World Bank senior economist and report lead, said private investment will continue favourable. Foreign direct investment in India may increase as the global value chain rebalances.

Auguste Tano Kouame, the country head of the World Bank in India, said, "A bad global environment will continue to pose challenges in the short term." India will be better able to take advantage of global chances in the future and grow faster if it cuts back on public spending that attracts more private investment.