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India To Grow At 8% by World Bank

Context:

India is projected to grow at 8% over the current fiscal year (April 1- March 31), and 7.1% over the next (2023-24) fiscal year, the World Bank said in its bi-annual South Asia Economic Focus Reshaping Norms: A New Way Forward.

Relevance:

GS III- Growth and Development

Dimensions of the Article

  1. Highlights of the Report:
  2. About World Bank

Highlights of the Report:

  • The country is estimated to have grown at 8.3% in the fiscal year that just passed, following a contraction of 6.6% in the previous year owing to the COVID-19 pandemic.
  • For the South Asia region, growth is expected to be slower than projected, by 1 percentage point, at 6.6% in 2022 and 6.3% next calendar year.
  • This is due to Russia’s war on Ukraine, which has impacted the region, when it was already experiencing “fragile” growth, rising commodity prices, bottlenecks to supply and financial sector vulnerabilities.
  • The impact of the war has seen faster inflation, deteriorating current account balances and growing fiscal deficits, according to the lender.

About World Bank

The World Bank Group is an international partnership comprising 189 countries and five constituent institutions that works towards eradicating poverty and creating prosperity. 

Objectives of the World Bank

  • This includes providing long term capital to its member nations for economic development and reconstruction. 
  • It helps in inducing long term capital for improving the balance of payments and thereby balancing international trade.
  • Also, it helps by providing guarantees against loads granted to large and small units and other projects for the member nations.
  • It ensures that the development projects are implemented. Thus, it brings a sense of transparency for a nation from war-time to a peaceful economy.
  • Also, it promotes the capital investment for member nations by providing a guarantee for capital investment and loans.
  • If the capital investment is not available than it provides the guarantee and then IBRD provides loans for promotional activities on specific conditions.

The World Bank Group consists of five organizations:

The International Bank for Reconstruction and Development

  • The International Bank for Reconstruction and Development (IBRD) lends to governments of middle-income and creditworthy low-income countries.

The International Development Association

  • The International Development Association (IDA) provides interest-free loans — called credits — and grants to governments of the poorest countries.
  • Together, IBRD and IDA make up the World Bank.

The International Finance Corporation

  • The International Finance Corporation (IFC) is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments.

The Multilateral Investment Guarantee Agency

  • The Multilateral Investment Guarantee Agency (MIGA) was created in 1988 to promote foreign direct investment into developing countries to support economic growth, reduce poverty, and improve people’s lives.
  • MIGA fulfills this mandate by offering political risk insurance (guarantees) to investors and lenders.

The International Centre for Settlement of Investment Disputes

  • The International Centre for Settlement of Investment Disputes (ICSID) provides international facilities for conciliation and arbitration of investment disputes.

-Source: The Hindu

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