The World Bank on Sunday said that the India’s growth rate is projected to fall to 6 per cent after a deceleration of the economy in the initial quarters of this fiscal year. In 2018-19, the growth rate of India stood at 6.9 percent.

Established in 1944, the five institutions body, World Bank Group is headquartered in Washington, DC.

In its latest edition of the South Asia Economic Focus, the World Bank said that the country was expected to gradually recover to 6.9 percent in 2021 and 7.2 per cent in 2022. It assumed that the monetary stance would remain accommodative, given benign price dynamics.

The World Bank’s observation came through a report released ahead of the annual meeting of the World Bank with the International Monetary Fund. The report noted that India’s economic growth decelerated for the second consecutive year.

The growth rate had declined from 7.2 percent in the 2017-18 financial year to 6.8 percent in 2018-19.

Due to the pick-up in manufacturing activities, the industrial output growth increased to 6.9 percent. The growth in agriculture and the services sector moderated to 2.9 and 7.5 percent, respectively.

In the first quarter of 2019-20, the economy experienced a sharp growth deceleration with the decline in private consumption on the demand side and the weakening of growth and services on the supply side, the report said.

As per the report, the current account deficit had widened to 2.1 percent of the GDP in 2018-19 from 1.8 a year before.

On the financing side, significant capital outflows in the first half of the current year were followed by a sharp reversal from October 2018 onwards and a build-up of international reserves to USD 411.9 billion at the end of the fiscal year.

Likewise, while the rupee initially lost ground against the USD (12.1 per cent depreciation between March and October 2018), it appreciated by about seven per cent up to March 2019, the report said.

“The general government deficit is estimated to have widened by 0.2 percentage points to 5.9 per cent of the GDP in 2018-19. This is despite the central government improving its balance by 0.2 percentage points over the previous year. The general government debt remained stable and sustainable – being largely domestic and long term-at around 67 per cent of GDP,” the report said.

The report said that due to the introduction of GST and demonetisation in the country, combined with the stress in rural economy and a high unemployment rate, the risk has heightened in the poorest households.

“Growth is expected to gradually recover to 6.9 per cent in 2020-21 and 7.2 per cent in 2021-22 as the cycle bottoms-out, rural demand benefits from effects of income support schemes, investment responds to tax incentives and credit growth resumes. However, exports growth is expected to remain modest, as trade wars and slow global growth depresses external demand,” the report said.

Meanwhile, on Saturday, while addressing a poll rally in Mumbai, Maharashtra, the Union Minster Ravi Shankar Prasad claimed that the economy is doing well as three movies earned Rs 120 crore in a single day.

READ: No economic crisis as 3 movies earned Rs 120 crore in single day: Ravi Shankar Prasad

The main policy challenge for India is to address the sources of softening private consumption and the structural factors behind weak investment, the bank said.

(With inputs from PTI)