World Bank ups India’s eco growth projection by 4% for FY22, predicts GDP growth between 7.5 to 12.5 %
The World Bank also said that poverty reduction is expected to return to its pre-pandemic trajectory as growth resumes
In what comes as a major relief, the World Bank has predicted that India’s real GDP growth for fiscal year 2021-22 could range from 7.5 to 12.5 per cent. The international financial institution also added that India’s economy bounced back amazingly after the lockdown period due to COVID-19 pandemic got over and restrictions were eased out.
The bank also scaled up its projection for India's economic growth by 4.7 percentage points to 10.1 per cent for FY 21-22.
"Given the significant uncertainty pertaining to both epidemiological and policy developments, real GDP growth for FY'22 can range from 7.5 to 12.5 percent, depending on how the ongoing vaccination campaign proceeds, whether new restrictions to mobility are required, and how quickly the world economy recovers," states the World Bank.
The bank, in its report titled ‘South Asia Economic Focus Spring 2021: South Asia Vaccinates’, held other factors like, how the ongoing vaccination campaign proceeds, restrictions to mobility and revival of the world economy, responsible for the growth of the country’s economy this fiscal.
Over the medium-term, growth is projected to stabilize within a 6-7 percent range. The report further claims that the investment, stimulated by a large government capital expenditure push, will also pick up gradually.
The liquidity stance of the Reserve Bank of India is also expected to remain accommodative during the fiscal year ending March 2022
"The general government deficit is expected to remain above 10 per cent of GDP until FY'22. As a result, public debt is projected to peak at almost 90 per cent of GDP in FY'21 before declining gradually thereafter," said the Bank.
The report further suggests that poverty reduction is expected to return to its pre-pandemic trajectory in the country, as growth resumes and labour market prospects improve.
“The poverty rate (at the $1.90 line) is projected to fall within 6 per cent and 9 per cent, and fall further to between 4 per cent and 7 percent by FY 2024,” says the bank’s report.
Talking about key factors, the World Bank mentioned that the sectors that were most hit by the nationwide lockdown that was imposed between April-June quarter of FY 21 and brought economic activity to a near standstill, were aviation and tourism, hospitality, trade, and construction. Agriculture, however, was mostly unaffected, the bank states.
“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.
The pandemic and measures taken to contain it, have severely disrupted the demand-supply chain.
However, India is marching on the right path to mitigate the social and economic impacts. While the Reserve Bank of India (RBI) is providing liquidity and other regulatory support, the government is re-prioritising its expenditure and fiscal expansion, the World Bank report noted.