A bad news has come for the Indian economy amidst the ongoing trade war between the US China. In fact, the World Bank has reduced the growth rate for FY 2025-26 from 6.7 per cent to 6.3 per cent, cutting the estimate of India’s economic growth rate.

In fact, the World Bank’s recent South Asia Development Report “Taxing Times” states that the reason for the decline in India’s economic growth rate is the reason for global economic weakness, policy uncertainty and public capital investment.

What has been said in the report

The report said that the increase in FY 2024-25 is likely to be 6.5 percent, which could be reduced to 6.3 percent next year. Private investment can give some support from monetary ease and regulatory reforms, but the uncertainty of global recession and domestic policy can reduce its effect.

IMF also reduced India’s GDP estimate

Earlier, the International Monetary Fund (IMF) also reduced India’s growth estimate from 6.5 per cent to 6.2 per cent. The IMF has also revised the global economic estimate, where global growth in 2025 is now expected to be 2.8 per cent, which was 3.3 per cent earlier.

India and China will strengthen world economy

According to IMF data, China (23 per cent) and India (15 per cent) will be the biggest contribution to global growth in the next five years. In contrast, America’s stake is likely to be reduced to 11.3 percent.

According to the report, South Asia’s overall growth rate is estimated to be 5.8 per cent in 2025, which is 0.4 per cent less than the previous estimate. However, in 2026, some improvement has been expected, and it can reach 6.1 percent.

Estimated growth of other major countries

Bangladesh: 3.3 percent in FY24/25, 4.9 percent next year increased

Pakistan: 2.7 percent in FY24/25, 3.1 percent in FY25/26

Sri Lanka: 3.5 percent in FY25, 3.1 percent in FY26

Decline in tax revenue

The report states that the level of tax revenue in South Asian countries is lower than other developing countries. While in other countries it is an average of 24 percent of GDP, it is only 18 percent in South Asia. Especially there has been a decrease in the case of consumption tax, corporate tax and personal income tax.

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