World Bank had in June projected India to grow at 6.6% for FY24. File
| Photo Credit: Reuters

The World Bank on Tuesday (September 3, 2024) raised the growth forecast for the Indian economy to 7% for the current fiscal year on the back of recovery in agri sector and rural demand.

World Bank had in June projected India to grow at 6.6% for FY24.

According to the World Bank Report released on Tuesday, India’s growth continues to be strong despite a challenging global environment.

Improvement in monsoon and private consumption have led to revising the India gross domestic product (GDP) forecast, said World Bank senior Economist Ran Li.

The growth rate of India, which accounts for the bulk of the South Asia region, is expected to remain strong at 7% in 2024-25, the World Bank said in the India Development Update.

Recovery in agriculture will partially offset a marginal moderation in industry, it said, adding that services will remain robust.

Rural private consumption will recover, thanks to the expected recovery in agriculture, the World Bank said.

New Delhi:

The Pradhan Mantri Jan Dhan Yojana (PMJDY) which completed ten years of its implementation on Wednesday has had a profound impact on every corner of the country.

The scheme launched in 2014, has proven to be the foundation stone in bringing over 80 per cent of Indian women under the ambit of financial inclusion. A significant boost in the bank account ownership of women in a decade, it has gone up from just 26 per cent in 2011 to 78 per cent in 2021.

Out of the total 53.13 crore Jan Dhan accounts over 30 crore are women’s accounts. Over 35 crore of the Jan Dhan account hail from rural or semi-urban areas. PM Jan Dhana Yojana has diminished the rural-urban divide in terms of bank accounts. The percentage of households that have a bank account or a post office account is now almost the same in urban and rural areas, 95 per cent vs 96 per cent respectively.

PM Jan Dhan Yojana has also bridged the gender gap in access to financial services. The gender gap in accessing financial services was 20 per cent in 2011, and it has been reduced to 6 per cent in 2017 which was less than the Global gap of 9 per cent.

PMJDY has other benefits as well in terms of financial inclusion. As of August 2024, over 36.13 crores of RuPay debit cards are issued without any cost to Jan Dhan account holders. The RuPay debit card is free of cost, it gives an insurance benefit of Rs 2 lakh along with an overdraft facility of up to Rs 10,000 to every cardholder.

The government’s focus on Digital Public infrastructure along with the trinity of Aadhar cards, mobile penetration and Jan Dhan accounts, the JAM trinity has propelled the financial inclusion rate from 25 per cent in 2008 to over 80 per cent of adults in the last 6 years.

PMJDY has been the foundation stone for many more people-centric economic initiatives. Whether it is direct benefit transfers, COVID-19 financial assistance, PM-KISAN, increased wages under MGNREGA, or life and health insurance coverage.

An SBI report in 2021 observed that states with higher PMJDY account balances saw a drop in crime rates and reduced alcohol and tobacco consumption, highlighting the program’s positive social impact.

The Jan Dhan Yojana has garnered global praise for its transformative impact on financial inclusion in India.

In 2023, a G20 report by the World Bank reveals that India has achieved its financial inclusion goals in just 6 years, a feat that would have taken 47 years without its advanced Digital Public Infrastructure.

India has surpassed China in financial inclusion metrics says the SBI report of 2021. Mobile and Internet banking transactions soared to 13,615 per 1,000 adults in 2020, up from 183 in 2015, while the number of bank branches per 100,000 adults rose to 14.7, exceeding those in Germany, China, and South Africa.

India’s account ownership more than doubled from 35 per cent in 2011 to 78 per cent in 2021. All these are because of the government’s various initiatives for financial inclusion.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

More than 100 countries, including India, face serious obstacles in becoming high-income countries in the next few decades, and New Delhi may take nearly 75 years just to reach one-quarter of US income per capita, a World Bank report said.

It will take China more than 10 years to reach one-quarter of US income per capita and Indonesia nearly 70 years, according to the World Development Report 2024: The Middle Income Trap.

Drawing on lessons of the past 50 years, the report finds that as countries grow wealthier, they usually hit a “trap” at about 10 per cent of annual US GDP per person – the equivalent of USD 8,000 today. That’s in the middle of the range of what the World Bank classifies as middle-income countries.

At the end of 2023, 108 countries were classified as middle-income, each with annual GDP per capita in the range of USD 1,136 to USD 13,845. These countries are home to six billion people – 75 per cent of the global population – and two out of every three people living in extreme poverty.

The road ahead has even stiffer challenges than those seen in the past: rapidly ageing populations and burgeoning debt, fierce geopolitical and trade frictions, and the growing difficulty of speeding up economic progress without fouling the environment, it said.

“Yet many middle-income countries still use a playbook from the last century, relying mainly on policies designed to expand investment. 

That is like driving a car just in first gear and trying to make it go faster,” the report said.

If they stick with the old playbook, most developing countries will lose the race to create reasonably prosperous societies by the middle of this century, said Indermit Gill, Chief Economist of the World Bank Group and Senior Vice President for Development Economics.

“At current trends, it will take China more than 10 years just to reach one-quarter of US income per capita, Indonesia nearly 70 years, and India 75 years,” the report said.

Gill also said the battle for global economic prosperity will largely be won or lost in middle-income countries.

The report proposes a strategy for countries to reach high-income status. Depending on their stage of development, all countries need to adopt a sequenced and progressively more sophisticated mix of policies Since 1990, only 34 middle-income economies have managed to shift to high-income status – and more than a third of them were either beneficiaries of integration into the European Union, or of previously undiscovered oil, the World Bank said. 

Washington:

India received $120 billion in remittances in 2023, almost twice the $66 billion received by Mexico in the same period, the World Bank said in a report released on Wednesday.

China ($50 billion), the Philippines ($39 billion), and Pakistan ($27 billion) figure among the top five nations in the list released by the World Bank. The list showed remittances in 2023 after a period of strong growth during 2021-2022. The total was an estimated $656 billion.

“Growing at 7.5 per cent, remittance flows to India touched $120 billion in 2023, reflecting the benefits of a deceleration in inflation and strong labour markets in the United States, the largest destination for India’s skilled migrants, and other OECD destinations, as well as positive demand for skilled and less-skilled workers in the GCC countries (which, together, are the second largest destination for Indian migrants),” the World Bank said.

While the same external demand conditions could have favoured remittance flows to Pakistan, weak internal conditions due to a balance of payments crisis and economic difficulties caused remittances to plummet 12 per cent to $27 billion in 2023, compared with more than $30 billion in 2022, it said.

According to the World Bank, remittance flows to India from the United Arab Emirates, which account for 18 per cent and are the second largest source of India’s remittances after the United States, benefited from the February 2023 agreement.

The latter established a framework to promote the use of local currencies for cross-border transactions and cooperation for interlinking payment and messaging systems between India and the United Arab Emirates.

The use of dirhams and rupees in cross-border transactions is instrumental in channelling more remittances through formal channels. In addition to the United Arab Emirates, Saudi Arabia, Kuwait, Oman, and Qatar account for 11 per cent of India’s total remittances, it said.

The World Bank said remittances to India are expected to grow 3.7 per cent to $124 billion in 2024, and at four per cent to $129 billion in 2025.

India’s efforts to link its Unified Payments Interface with source countries such as the United Arab Emirates and Singapore are expected to reduce costs and speed up remittances, it said.

“Most importantly, the diversification of India’s migrant pool between a large share of highly skilled migrants employed mostly in high-income OECD markets and the less-skilled migrants employed in the GCC markets is likely to lend stability to migrants’ remittances in the event of external shocks,” the bank said.

“Migration and resulting remittances are essential drivers of economic and human development,” said Iffath Sharif, Global Director of the Social Protection and Jobs Global Practice at the World Bank.

“Many countries are interested in managed migration in the face of global demographic imbalances and labour deficits on the one hand, and high levels of unemployment and skill gaps on the other… The resilience of remittances underscores their importance for millions of people,” said Dilip Ratha, lead economist and lead author of the report.

“Leveraging remittances for financial inclusion and capital market access can enhance the development prospects of recipient countries. The World Bank aims to reduce remittance costs and facilitate formal flows by mitigating political and commercial risks to promote private investment in this sector,” he said.

Representational image only.
| Photo Credit: AFP

Pakistan has decided to seek a rollover of around $12 billion debt from key allies such as China in the 2024-25 fiscal year to meet a whopping $23 billion worth of gap in its external financing as the federal government aims to achieve budget targets before the expected arrival of an IMF team to the cash-strapped country.

According to the Finance Ministry insiders, $5 billion from Saudi Arabia, $3 billion from the UAE and $4 billion from China will be rolled over, adding that the estimate of further new financing from China would also be included in the next financial year’s budget, The Express Tribune newspaper reported.

Pakistan will receive more than $1 billion from the International Monetary Fund (IMF) under the fresh loan programme, whereas new financing from the World Bank and Asian Development Bank has also been included in the estimated budget.

According to the Finance Ministry sources, new loan programme agreements will be made with financial institutions. The federal government aims to achieve budget targets before the anticipated arrival of the IMF review mission in Pakistan.

Negotiations for a new loan programme with the global lender are expected to commence in mid-May ahead of the budget which will be presented in June. The Finance Ministry sources said the Ministries had been instructed to complete the targets before the negotiations on the new loan programme.

They added that the details would be given to the IMF delegation when all the important targets were met. It has also been decided to have the budget strategy paper approved by the federal Cabinet before the IMF review mission arrives in the country.

According to the sources, the Finance Ministry has started preparing the budget to set the targets for debt repayment, defence budget and tax collections. Besides, the development and ongoing budget targets will also be determined, according to the paper.

Pakistan has been suffering the chronic ailment of how to meet external liabilities. Traditionally, it depended on remittances, export proceeds and foreign loans to meet its liabilities. But exports haven’t increased to match the imports and avenues of foreign aid have gradually dried up, putting pressure on the Rupee and essential imports.

Last year, it narrowly avoided default due to a timely short-term loan agreement with the International Monetary Fund which provided $3 billion during nine months. The country is once again looking towards the global lender to provide a fresh loan to keep it moving.

In the trying economic conditions, Pakistan has been heavily supported by the remittances its workers living and working around the globe send. The country received the second-highest remittances of the ongoing 2023-24 fiscal at $2.8 billion in April 2024.

According to the State Bank of Pakistan (SBP), the remittances increased by 3.5% to $23.8 billion cumulatively in the first 10 months of FY24 compared to the same period last year.

Remittance inflows during April 2024 were primarily sourced from Saudi Arabia ($712 million), the United Arab Emirates ($542.3 million), the United Kingdom ($403.2 million) and the United States of America ($329.2 million), according to the bank.

The remittances earlier had peaked near $3 billion in the prior month of March 2024, marking a 23-month high.

Separately, the Dawn newspaper reported that Pakistan is engaging with the Chinese leadership for the revival of more than 1800-megawatt of hydropower projects (HPPs) and investment from fresh Chinese companies in the country’s transmission and distribution network as part of the second phase of the China-Pakistan Economic Corridor (CPEC).

The authorities are trying to convene a meeting of the Joint Cooperation Committee (JCC) of the Cabinet on May 22-23 so that Prime Minister Shehbaz Sharif’s upcoming visit to Beijing early next month will be a success.

A high-level delegation led by Planning Minister Ahsan Iqbal is currently in China to pursue existing investors and financial institutions and tap into more firms in the transmission and distribution network as part of CPEC’s second phase.

In his meeting, Mr. Iqbal sought China’s continued cooperation in the early implementation of the Azad Pattan and Kohala hydropower projects. The two sides agreed to hold the next round of the Joint Working Group meeting on Energy (JEWG) soon.

Washington:

The war between Israel and Hamas could trigger price shocks for raw materials such as oil and agriculture products if the conflict escalates across the Middle East, the World Bank warned in a report Monday.

Oil has already risen six percent since the latest round of fighting, sparked when Hamas operatives from Gaza entered southern Israel and killed more than 1,400 people, mostly civilians, and seized nearly 240 hostages, according to Israeli officials.

Israel has responded with an unrelenting bombardment of Gaza, which the Hamas-run health ministry says has killed more than 8,000 people, nearly half of them children.

The war between Israel and Hamas comes as Russia’s war in Ukraine has already put pressure on markets, with that war being “the biggest shock to commodity markets since the 1970s,” warned World Bank chief economist Indermit Gill.

“That had disruptive effects on the global economy that persist to this day,” Indermit Gill said in a statement.

“Policymakers will need to be vigilant. If the conflict were to escalate, the global economy would face a dual energy shock for the first time in decades” from both the war in Ukraine and conflict in the Middle East, he said.

Many potential price hikes will depend on what happens to world oil prices and exports, the World Bank said.

In an optimistic scenario, oil could rise 3-13 percent, between $93 and $102 per barrel.

A median scenario envisages prices rising up to $121, while a worst-case scenario would see oil reach a peak of between $140 and $157 — potentially exceeding all-time highs not seen since 2008.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

World Bank President Ajay Banga. File.
| Photo Credit: Reuters

World Bank President Ajay Banga said on October 24 that geopolitic tensions pose the biggest threat to the world economy, but that risks “tend to move around” fast, so others should not be ignored.

“The U.S. 10-year Treasury [yield] just crossed 5% briefly yesterday, these are areas we haven’t seen. So yes, that is right there lurking in the shadows,” Banga said during the annual Future Investment Initiative (FII) in Riyadh.

“And then, how long before the next pandemic?

“There is so much going on in the world and geopolitics in the wars that you’re seeing and what just happened recently in Israel and Gaza. At the end of the day, when you put all this together, I think the impact on economic development is even more serious,” he said.

“While everything looks better than we expected it to look in the developed world some time ago, I think that we’re at a very dangerous juncture.”

The World Bank’s chief economist warned Wednesday that interest rate hikes could spell trouble for countries struggling to deal with debt.

The U.S. Federal Reserve, the European Central Banks and others have raised rates and warned that they could remain high longer than expected in order to bring down elevated inflation.

The International Monetary Fund said Tuesday that the world economy remains resilient despite the fallout from Covid, the war in Ukraine and a cost-of-living crisis, but that it was “limping along, not sprinting.”

“In spite of all of these shocks, we have not seen any big economies really get into trouble. But the good news basically ends there,” said World Bank chief economist Indermit Gill.

“The trouble now is that because of the high rates, the high interest rates that you mentioned, growth is slowing down a lot,” he said at a news conference during the IMF-World Bank annual meetings in Marrakesh, Morocco.

Mr. Gill recalled that during another long period of high interest rates, in the 1970s, around 24 economies were left bankrupt.

“We should expect this tightening cycle to also take long,” he said. “We should expect some countries to (get) into trouble.”

World Bank President Ajay Banga said there was “no doubt” that inflation has begun to come down but that rates will stay higher for longer.

“That can be a complicated event in many ways for investments as well as to people who over the years have got used to a low interest rate environment,” Mr. Banga said.

The IMF and World Bank last held their meetings in Africa in 1973, when Kenya hosted the event and some nations were still under colonial rule.
| Photo Credit: Reuters

The IMF and World Bank gather in Morocco Monday for their first annual meetings on African soil in 50 years, under pressure to reform to better aid poor nations blighted by debt and climate change.

The International Monetary Fund and World Bank traditionally hold their annual gathering of finance ministers and central bank governors outside their Washington headquarters every three years.

The southern Moroccan city of Marrakesh was supposed to host it in 2021, but the gathering was postponed twice because of the Covid pandemic.

A powerful earthquake that killed nearly 3,000 people in the region south of Marrakesh last month threatened to derail the event again, but the government decided it could go ahead.

The IMF and World Bank last held their meetings in Africa in 1973, when Kenya hosted the event and some nations were still under colonial rule.

Half a century later, the continent faces an array of challenges ranging from conflict to a series of military coups to unrelenting poverty to natural disasters.

“A prosperous world economy in the 21st century requires a prosperous Africa,” IMF Managing Director Kristalina Georgieva said in a speech in Abidjan last week.

In a symbolic move, the IMF and World Bank are poised to give Africa a third seat on their executive boards, which Georgieva said would give the continent a “stronger voice”.

But the thorniest issues revolve around money.

The main contributors are not in favour of a capital increase as it would force them to put up more funds and would give greater influence to emerging powers such as China and India.

The World Bank, however, is expected to confirm plans to boost lending by $50 billion over the next decade through balance sheet changes.

World Bank President Ajay Banga wants to go even further and raise capacity by $100 billion or as much as $125 billion through contributions from advanced economies.

But the issue is unlikely to be finalised in Marrakesh.

The global lenders may use the meetings to reform their quota systems.

The quotas, which are based on a country’s economic performance, determine how much funding they should provide to the IMF, their voting power and the maximum amount of loans they can obtain.

Activists plan to hold a march in Marrakesh to urge the Washington-based institutions to take bold steps against climate change and debt.

NGOs say the austerity-driven solutions offered by the IMF and World Bank are only widening the gap between the rich and the poor in the developing world.

Campaigners say global lenders should focus instead on cancelling the debts of the poorest nations and imposing taxes on the rich.

Oxfam said 57 percent of the world’s poorest countries have to cut public spending by a total of $229 billion over the next five years.

“The World Bank and IMF are returning to Africa for the first time in decades with the same old failed message,” said Oxfam International executive director Amitabh Behar.

“The IMF is forcing poorer countries into a starvation diet of spending cuts, driving up inequality and suffering,” Behar said.

NEW DELHI:

The World Bank on Tuesday maintained its forecast for India’s economic growth for the current fiscal year that started on April 1, saying the Indian economy continued to grow rapidly despite challenging external conditions.

The World Bank maintained its growth forecast for India at 6.3%, after it lowered it during its April review.