India to remain a bright spot amid global uncertainty: World Bank's Auguste Kouame

Economic Times

4 hours ago

Despite global economic uncertainties, India is projected to maintain strong growth, with a GDP increase of 6.3% in FY26, supported by its robust domestic economy and lower trade dependency. However, challenges remain, including stagnant manufacturing growth and increasing divergence among states. Artificial intelligence, energy, and skill development are identified as key growth drivers.
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India is expected to remain a bright spot in the global economy despite trade and policy uncertainty, economists and experts noted at a panel discussion on Thursday.'India has a strong domestic economy and remains a bright spot in the global economy,' said Auguste Kouame, country director for India at the World Bank India's gross domestic product (GDP) is projected to grow by 6.3% in FY26, according to the World Bank. The Indian economy expanded by 6.5% in FY25.India's lower trade dependency provides it buffer against global volatility, panelists noted speaking at the India Policy Forum 2025 by NCAER.'India will be less affected than other countries in Asia as trade accounts for 40% of GDP, while for others it is 80%,' said Joyce Chang, managing director and chair of global research, J.P. Morgan.In April, the United States announced tariffs on around 60 countries worldwide, including India, which was hit by a 26% tariff rate. While this has been paused for 90 days until July 9, the baseline tariff of 10% remains in place.'A tariff is like a tax that will be borne mostly by the consumers,' said Chang.For the United States, this could be an additional tax of $400 billion and offset growth by 0.6-0.7 percentage points, she added.The World Bank projects US economic growth to grow to 1.4% in 2025 compared to 2.8% in 2024.Kouame emphasized the importance of India's role in the global economy, particularly within the Global South. 'The global economy stands on four key anchors – US, China, European Union, and Global South, and India will play a big role in the global south coalition,' he said.As India aims to become an advanced economy by 2047, there is a puzzle which policymakers are struggling with, noted Prachi Mishra, director and head, Ashoka Isaac Center for Public Policy, Ashoka University.'Manufacturing's share in GDP has remained stagnant over the years, and the paradox is that despite being labour-abundant, India's domestic production and exports are becoming increasingly capital intensive,' Mishra explained.Manufacturing accounts for around 17% of India's GDP.Mishra also raised concern that divergence among states has increased.Despite global headwinds, panelists believed that the financial markets would remain insulated.Looking ahead, Kouame identified that artificial intelligence (AI), energy, and skill development are some of the key areas that will drive growth for the global economy.