Ukraine war to result in 1.3% lower GDP growth for India: World Bank
THE ESTIMATED GROWTH FOR INDIA IN THE FISCAL YEAR 2021-2022 IS PREDICTED TO DROP TO 8%
Russia's war in Ukraine is likely to result in a significant 1.3 per cent lower GDP growth for India and 2.3 percentage point lower income growth, a top World Bank official has said, even as the lending agency observed that India is emerging strongly from the COVID-19 crisis.
Hans Timmer, World Bank Chief Economist for the South Asia Region, in an interview to PTI also emphasised that in the long-term, India needs to really work hard to reduce its dependence on fossil fuel, shift towards renewable energy and increase the participation of women in the workforce, which at
2.3%
LOWER INCOME GROWTH FOR INDIA
present is quite low at 20 per cent.
"Our overall assessment is that the war in Ukraine leads to 2.3 percentage point lower income growth for India and 1.3 per cent lower GDP growth. But the adjustment was less than that and that is as I said because of positive surprises we saw in recent data," he said in response to a question.
The World Bank in its latest South Asia Economic Focus report said that the estimated growth for India in the fiscal year 2021-2022 is 8.3 per cent, which it has forecast to drop to 8 per cent in 2022-2023 and 7.1 per cent in 2023-2024.
"On India, the first observation is that we lowered the forecast for the fiscal year that just started seven tenths of a per cent. That is a combination of the negative impact of the war, but also some positive surprises, especially on the export of digital services which were really strong," Timmer said.
Observing that India is coming from a deep recession at the beginning of the COVID cycle, he said, it is still recovering and not all the damages have been undone.
"But you can see now that growth rates are back to where they were before the pandemic. There's no strong link between a new variant coming up and GDP growth. But the war in Ukraine is an additional strong headwind. That mainly comes through high commodity prices for India, which is a problem for inflation. It is a problem for the fiscal position as far as they are subsidizing goods," he said.