The World Bank on Tuesday slashed its 2021-22 GDP growth forecast for the Indian financial system to 8.3 per cent from 10.1 per cent estimated in April, saying financial restoration is being hampered by the devastating second wave of coronavirus infections.
It projected a 7.5 per cent financial growth in the 2022-23 fiscal (April 2022 to March 2023).
The Washington-based world lender, in its newest subject of Global Economic Prospects launched right here, mentioned an infinite second Covid-19 wave in India is undermining the sharper-than-expected rebound in exercise seen through the second half of fiscal yr 2020-21, particularly in providers.
“India’s recovery is being hampered by the largest outbreak of any country since the beginning of the pandemic,” the World Bank mentioned.
The projected growth compares to the worst ever contraction of seven.3 per cent witnessed in the fiscal yr ended March 31, 2021 (FY21) and 4 per cent growth in 2019-20.
In April this yr, the World Bank had forecast a ten.1 per cent growth in Indian GDP for FY22. This was larger than 5.4 per cent it had projected in January. But now the projections have been slashed.
The multilateral lending company mentioned India’s GDP is probably going to develop by 6.5 per cent in 2023-24.
In its report, the Bank mentioned that the worldwide financial system is ready to develop by 5.6 per cent in 2021 – its strongest post-recession tempo in 80 years.
“For India, GDP in fiscal year 2021/22 starting from April 2021 is expected to expand 8.3 per cent,” it mentioned.
Activity will profit from coverage assist, together with larger spending on infrastructure, rural growth, and well being, and a stronger-than anticipated restoration in providers and manufacturing, it mentioned.
The forecast for FY22 elements in anticipated financial injury from an infinite second Covid-19 wave and localised mobility restrictions since March 2021, the report mentioned.
Activity is anticipated to observe the identical, but much less pronounced, collapse and restoration seen through the first wave, it mentioned.
“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.
According to the World Bank, in India, the FY 2021/22 budget marked a significant policy shift.
The government announced that the health-related spending would more than double and set out a revised medium-term fiscal path intended to address the economic legacy of the pandemic.
Following deteriorating pandemic-related developments, the Reserve Bank of India (RBI) announced further measures to support liquidity provision to micro, small and medium firms, and loosened regulatory requirements on the provisioning for non-performing loans.
“In India, fiscal coverage shifted in the FY 2021/22 finances towards larger expenditure focused at healthcare and infrastructure to increase the post-pandemic restoration. The renewed outbreak, nevertheless, might require additional focused coverage assist to handle the well being and financial prices,” it added.
On March 31, the World Bank said 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.
It had predicted that the country’s real GDP growth for fiscal year 21/22 could range from 7.5 to 12.5 per cent 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).
In April and May, India struggled with the second wave of the Covid-19 pandemic with more than 3,00,000 daily new cases. Hospitals were reeling under a shortage of medical oxygen and beds.
In mid-May, new coronavirus cases in India hit a record daily high with 4,12,262 new infections.
On Tuesday, India reported less than one lakh new coronavirus infections after a gap of 63 days, while the daily positivity rate dropped to 4.62 per cent.
A single day rise of 86,498 cases were registered, the lowest in 66 days, taking the total tally of Covid-19 cases to 2,89,96,473.
The Covid-19 death toll climbed to 3,51,309 with 2,123 daily deaths, the lowest in 47 days.