Nirmala Sitaraman Expects India’s GDP to Surpass 6% in FY24, But Warns of Global Growth Uncertainties

Finance Minister Nirmala Sitharaman expressed her concerns regarding the global economic outlook and geopolitical environment, despite India’s projected growth rate of over 6% this year. According to a tweet from the finance ministry, Sitharaman made these remarks during the Development Committee Meeting of the World Bank-IMF Spring Meeting in Washington DC.

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According to the Economic Survey by the finance ministry on January 31, the country’s GDP growth was estimated to be between 6-6.8% in FY24, as compared to the advance estimate of 7% in FY23. However, the International Monetary Fund (IMF) has now reduced its growth projections for India by 20 bps and 50 bps for the current fiscal and the next, respectively. This brings the new estimates to 5.9% and 6.3%, respectively, which is in line with the cuts in its global growth forecasts for 2023 and 2024 by 10 bps each to 2.8% and 3%. This suggests that India may not be performing as well as expected amidst the global turmoil, although it is still anticipated to be the fastest-growing major economy during the forecast period.

During the Global Sovereign Debt Roundtable (GSDR), the minister emphasized the importance of increasing current global efforts, including those by the G20, to tackle the growing debt distress around the world. This is a key priority for the G20 India Presidency in 2023. According to the ministry’s tweet, the Finance Minister emphasized the importance of transparent debt reporting and information exchange, as well as the need for clear guidelines regarding the equitable treatment of debt, the predictability and promptness of the debt restructuring process, a mechanism for evaluation and enforcement, and a defined timeline for the various stages of debt restructuring.

The Global Sovereign Debt Roundtable (GSDR) was co-chaired by Kristalina Georgieva, the Managing Director of the IMF, David Malpass, the President of the World Bank Group, and Sitharaman. The GSDR focused on discussing the challenges of debt sustainability and debt restructuring and explored potential solutions to tackle them.

At the initial gathering of the G20 Finance Ministers and Central Bank Governors (FMCBG) in February, there was an acknowledgement of the pressing need to tackle debt risks in low and middle-income nations, which encompassed Sri Lanka.

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As per the statement released by the roundtable, the meeting aimed to discuss the measures that can be implemented immediately to expedite the process of debt restructuring and make it more effective, particularly under the G20 Common Framework.

The statement further elaborated that the participants agreed on the criticality of improving information sharing urgently, including macroeconomic projections and debt sustainability assessments, at the initial stages of the restructuring process. According to the statement, the IMF and World Bank will swiftly provide staff instructions on the sharing of information during every phase of the debt restructuring procedure.