India’s economy has bounced back amazingly from the COVID-19 pandemic and nationwide lockdown over the last one year, but it is not out of the woods yet, according to the World Bank, which in its latest report has predicted that the country’s real GDP growth for fiscal year 21/22 could range from 7.5 to 12.5 per cent.
The Washington-based global lender, in its latest South Asia Economic Focus report released ahead of the annual Spring meeting of the World Bank and the International Monetary Fund (IMF), said that the economy was already slowing when the COVID-19 pandemic unfolded.
After reaching 8.3 per cent in FY17, growth decelerated to 4.0 per cent in FY20, it said.
The slowdown was caused by a decline in private consumption growth and shocks to the financial sector (the collapse of a large non-bank finance institution), which compounded pre-existing weaknesses in investment, it said.
Given the significant uncertainty pertaining to both epidemiological and policy developments, the real GDP growth for FY21/22 can range from 7.5 to 12.5 per cent, depending on how the ongoing vaccination campaign proceeds, whether new restrictions to mobility are required, and how quickly the world economy recovers, the World Bank said.
“It is amazing how far India has come compared to a year ago. If you think a year ago, how deep the recession was… unprecedented declines in activity of 30 to 40 per cent, no clarity about vaccines, huge uncertainty about the disease. And then if you compare it now, India is bouncing back, has opened up many of the activities, started vaccination and is leading in the production of vaccination,” Hans Timmer, World Bank chief economist for the South Asia Region, told PTI in an interview.
However, the situation is still incredibly challenging, both on the pandemic side with the flare up that is being experienced now. It is an enormous challenge to vaccinate everybody in India, the official said.
“Most of the people underestimate the challenge,” he said.