The World Bank has slashed India’s GDP forecast to 8.3 per cent for FY22, as against its earlier estimate of 10.1 per cent, in its latest issue of Global Economic Prospects.
It has further projected India’s growth to be 7.5 per cent in FY23, even as its recovery is being hampered by a devastating second wave of the Covid-19 pandemic.
In the report, World Bank notes that the enormous second Covid-19 wave is undermining the sharper-than-expected rebound in activity seen during the second half of Fiscal Year 2020/21, especially in services.
“India’s recovery is being hampered by the largest outbreak of any country since the beginning of the pandemic,” it said.
In 2020, India’s economy is estimated to have contracted by 7.3 per cent while in 2019, it registered a growth rate of four per cent, the World Bank said, adding that in 2023, India is expected to grow at 6.5 per cent.
In its report, the Bank said that the global economy is set to expand by 5.6 per cent in 2021 — its strongest post-recession pace in 80 years.
“For India, GDP in fiscal year 2021/22 starting from April 2021 is expected to expand 8.3 per cent,” it said.
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, it said.
The forecast marks significant expected economic damage from an enormous second Covid-19 wave and localised mobility restrictions since March 2021, the report said.
“The pandemic will undermine consumption and investment as confidence remains depressed and balance sheets damaged. Growth in FY 2022/23 is expected to slow to 7.5 per cent, reflecting lingering impacts of COVID-19 on household, corporate and bank balance sheets; possibly low levels of consumer confidence; and heightened uncertainty on job and income prospects,” it said.