Asian Development Bank's Projections for India's Economy

GS PAPER 3

THE HINDU EDITORIAL

GDP Growth:

Inflation Outlook:

Retail inflation is expected to ease to 4.6% in 2024 and further to 4.5% in 2025-26.
Food inflation is forecasted to drop to 5.7% in 2024 as farm output stabilizes.

Risk Factors:

Upside risk includes higher foreign direct investment inflow, particularly into manufacturing.
Downside risk includes potential global shocks such as a spike in crude oil and energy prices leading to higher inflation and tighter financial conditions.
Domestically, there are risks of underperformance in agriculture due to weather shocks.

Growth Drivers:

Growth is driven by public and private sector investment demand and improving consumer demand.
Rural consumption is expected to improve due to a projected normal monsoon.
Urban consumption is bolstered by rising incomes and improved labor market conditions.

External Sector:

Imports may increase to meet domestic demand, potentially widening the Current Account Deficit to 1.7% of GDP in 2024 and 2025.
Exports are likely to be relatively muted in 2024 but are expected to improve in 2025-26.
Regional and Global Impact:
India accounts for 80% of South Asia’s GDP and remains the fastest-growing sub-region.
Foreign direct investment inflow might remain subdued in the near term due to tight global financial conditions.

Consumer Confidence:

Consumer demand is expected to increase as urban confidence levels rise due to falling inflation and improving labor markets.

PREVIOUS YEAR QUESTION ON RELATED TOPIC:-

India is a member of which of the following? [2008]

1. Asian Development Bank

2. Asia-Pacific Economic Cooperation

3. Colombo Plan

4. Organization for Economic Cooperation and

Development (OECD)

Select the correct answer using the code given below:

Codes:

(a) 1 and 3 only (b) 2 and 4 only

Correct answer:- (a)