On Tuesday, the World Bank predicted India’s GDP to drop down to 8.3 percent for the FY22 as against it previous estimate of 10.1 percent. It further forecasted the country’s growth to be 7.5 percent in the year 2022, considering the recovery being interrupted by the second wave of COVID 19.
The Washington based global lender, in its recent issue of “Global Economic Prospect” marked that in India the unforeseen COVID-19 second wave is undermining the sharper-than-expected rebound in activity witnessed during the second phase of fiscal year 2020-2021, especially in its services. The World Bank stated, “India’s recovery is being hampered by the largest outbreak of any country since the beginning of the pandemic.”
Adding that in 2023, India is expected to grow at 6.5 percent, it remarked, In 2020, India’s economy is estimated to have contracted by 7.3 percent while in 2019 it registered a growth rate of 4 percent.
As per the report, the bank stated that the global economy is about to expand by 5.6 percent in 2021- its strongest post recession pace in the past 80 years. It further elaborated, “For India, GDP in fiscal year 2021/22 starting from April 2021 is expected to expand 8.3 per cent.
It further predicted that activity will benefit from policy support, including higher spending on infrastructure , rural development, and health, and a stronger than expected recovery in services and manufacturing. The report further explained that although the forecast has been revised up by 2.9 percentage point, it marks significant expected economic damage from an enormous second COVID-19 wave and localized mobility restrictions since March 2021. It added that activity is expected to follow the same, yet less pronounced, collapse and recovery seen during the first wave.
The World Bank said, “The pandemic will undermine consumption and investment as confidence remains depressed and balance sheets damaged. Growth in FY2022/23 is expected to slow to 7.5 percent, reflecting lingering impacts of COVID-19 on household, corporate and bank balance sheet, possibly low levels of consumer confidence, and heightened uncertainty on job and income prospects.”
As per the World Bank, in India, the FY 2021/22 marked a significant policy shift. The government declared that the health related expenses would be more than double and laid down revised medium term fiscal path aimed to address the economic legacy of the pandemic. Looking in the deteriorating pandemic related developments, the Reserve Bank of India set forth further measures to support liquidity provisions to micro, small and medium firms, and loosened regulatory requirements on provisioning for non performing loans .
The World Bank, on 31st March stated that the India’s economy bounced back amazingly from COVID-19 pandemic and nationwide lockdown over the last one year, but it is not out of woods yet. Earlier it had predicted that the country’s real GDP growth for fiscal year 21/22 could range from 7.5 to 12.5 percent in its recent South Asia Economic Focus report released ahead of the annual spring meeting of the World Bank and International Monetary Fund.
In the second wave of COVID-19 India has almost competed with daily cases of above 3 lakhs around the month of April. In the mid May the country hit the highest daily COVID-19 cases above 4 lakhs. However in the past few days it has succeeded in maintaining less COVID-19 cases.