INDIA’S ECONOMY TO GROW AT 7.5-12.5%: WB
India’s GDP might grow at slightly above 10%, a top World Bank official told reporters
WASHINGTON: Private consumption and public investment will see the Indian economy likely growing by 10.1% in 2021-22, the World Bank said, although, in a sign of allaround uncertainty caused by the Covid-19 pandemic, it said. India’s economic growth in 2021-2022 would be in the broad range from 7.5% to 12.5%.
The 10.1% is 4.7 percentage points higher than the World Bank’s previous estimate for India’s growth in 2021, and reflects the pace of the country’s recovery.
WASHINGTON: In a sign of allaround uncertainty caused by the Covid-19 pandemic, the World Bank (WB) has, in a rare development, opted to project India’s economic growth for FY22 as a broad range from 7.5% to 12.5% and not one number as it does normally.
It might be slightly above 10, a top World Bank official told reporters when pressed to guess a figure at a briefing onTuesday.
The International Monetary Fund (IMF) has projected India’s economy will grow by 11.5% over 2021 and 6.8% over 2022, painting a rosier picture.
“Given the significant uncertainty pertaining to both epidemiological and policy developments, real GDP (Gross Domestic Product) growth for FY21/22 can range from 7.5 to 12.5%, 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 in a report titled “South Asia Vaccinates”.
Going forward, the report said, “the main risks to the outlook include the materialisation of financial sector risks, that could compromise a recovery in private investment, and new waves of Covid-19 infections.”
The Indian economy had been slowing, partly due to the collapse of a large non-bank financial firm and the shockwaves it sent through the financial system. The Covid-19 pandemic and the mitigation measures such as lockdowns deepened the crisis several times over, contracting output and shrinking spending and investments.
“In response to the Covid-19 outbreak, the authorities implemented a nationwide lockdown, which brought economic activity to a near standstill between April and June 2020 (Q1FY21),” the report said. Aviation and tourism, hospitality, trade, and construction, were the worst hit as well and industrial activity, overall, was also deeply disrupted. Agriculture, however, was mostly unaffected, it noted.
Acknowledging it is “not normal” to cite growth forecast in a range of numbers, World Bank’s Chief Economist for South Asia Hans Timmer said: “We are really in an unprecedented circumstance. Not just the hits (were) unprecedented, but also the character of the crisis was as we had never seen before.”
He added that certain sectors of the economy hat were hit were normally much more resilient, especially the services sector, domestic services. “It’s the informal sector. And as a result, we can’t rely really on the past on how this recovery will shape up.”
Pressed to hazard a guess on a specific number, Timmer said, “I’m always cost cautious to mention numbers, which might be contradicted in the in the report. My guess is around 10%, just above 10% for India.”
That’s slightly below IMF’s forecast of 11.5%, he added and went on to attribute it to the “uncertainty (which) is really high”.