Key Highlights:
- India’s Growth Projection: Economic growth forecast at 6.7% per annum for FY 2025–26 and FY 2026–27, driven by strong services and manufacturing sectors.
- Regional Growth Outlook: South Asia’s overall growth projected to rise to 6.2% in FY 2025–26, with India as a key driver.
- Challenges for Neighbors: Pakistan and Sri Lanka show signs of recovery, while Bangladesh faces economic uncertainty due to political turmoil and supply constraints.
- Private Investment Surge: India’s private investments are expected to rise, offsetting moderated public investment.
New Delhi: According to the World Bank’s latest growth estimates for South Asia, India is set to maintain a robust 6.7% annual growth rate over the next two fiscal years, starting April 2025. The country’s steady performance is expected to bolster the region’s economic prospects, with South Asia’s growth projected to reach 6.2% in FY 2025–26.
India: A Beacon of Economic Stability
The World Bank report highlights India’s sustained growth, driven by:
- Services Sector Expansion: Continued growth in IT, healthcare, and financial services.
- Manufacturing Strength: Enhanced government initiatives to improve the business environment are expected to support manufacturing growth.
- Private Investment Surge: A rise in private investment is forecasted to balance out the impact of moderating public investments.
While FY 2024–25 growth is projected to ease to 6.5%, primarily due to weaker manufacturing and slower investment, private consumption remains resilient. This is attributed to higher rural incomes and a rebound in agricultural output, reflecting a positive shift in the rural economy.
Challenges Across the Region
The report paints a mixed picture for other South Asian economies:
- Pakistan and Sri Lanka: Recovery fueled by improved macroeconomic policies, addressing previous financial challenges.
- Bangladesh: Economic growth forecasted to slow to 4.1% in FY 2024–25, weighed down by political unrest, energy shortages, and import restrictions. Growth is expected to recover to 5.4% in FY 2025–26.
Excluding India, South Asia’s growth is estimated at 3.9% for 2024, with a modest rise to 4% in 2025 and 4.3% in 2026. However, Bangladesh’s uncertainties have slightly downgraded the region’s outlook.
The Road Ahead
India’s growth trajectory underscores its pivotal role in driving South Asia’s economy, with a focus on innovation, infrastructure development, and sustainable practices. By addressing challenges in manufacturing and boosting investment, the nation is well-positioned to reinforce its status as the region’s economic leader.
Meanwhile, its neighbors must navigate political instability and structural constraints to unlock their potential and contribute to South Asia’s collective progress.
India’s resilience amid global and regional challenges showcases the robustness of its economic framework. As the World Bank’s projections indicate steady growth, the nation’s proactive measures and private-sector dynamism will remain critical in sustaining its leadership in South Asia’s economic narrative.
