India expected to grow at 8.3% in FY22; second Covid wave paused recovery, says World Bank

Buoyed by an increase in public investment and incentives to boost manufacturing, India's economy is expected to grow by 8.3% in the fiscal year 2021-22, less than the previous projection early this year before the country was hit by the second wave of the COVID-19 pandemic, the World Bank has said in its latest report.

World Bank Chief Economist for the South Asia Region Hans Timmer told PTI here that when one looks at the high frequency data, they see that as a result of the second wave of the COVID-19 pandemic, the recovery paused, and some indicate that the recovery actually declined briefly.

"We project for this fiscal year 8.3% (growth rate for Indian economy) that is less than we projected early in the year before the health crisis caused by the second wave.

"Given the sharp contraction of the economy last year, it might not look like a lot, but in my view, that is actually very positive news, given the violent second wave and the severity of the health crisis," he said on Thursday.

On March 31, the World Bank said India's real GDP growth for fiscal year 21/22 could range from 7.5 to 12.5% 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-May, India struggled with the second wave of the deadly coronavirus pandemic with more than 3,00,000 daily new cases, throwing hospitals and health system out of gear due to a shortage of medical oxygen and beds.

According to Timmer, what is remarkable and what is the positive part of that number is that the pause was short lived, and the hit on the economy was by far enough, not even comparable as large as a year earlier.

"That's how we ended up with 8.3% growth," he said.

"We still think that the situation is very uncertain internally and sometimes externally. We still use a very broad range of possible outcomes for the Indian economy, although the more we are progressing in the current year, the less the uncertainty is.