The growth for FY 2022-23 is expected to slow to 7.5 per cent, the World Bank predicted.
The World Bank has predicted India's Gross Domestic Product (GDP) to grow at 8.3 per cent in 2021 in its latest report on global economic recovery post COVID-19 pandemic.
The June 2021 Global Economic Prospects report, released by the World Bank on Tuesday, notes the surge of COVID-19 cases in South Asia, especially India and the slow pace of vaccination. It also said that the recovery has done little to narrow the gap with pre-pandemic trends. The GDP in 2022 is expected to be 9 per cent lower than projected prior to the pandemic.
In India, the growth for FY 2021-22 is forecast at 8.3 per cent, supported by plans for higher spending on infrastructure, rural development, and health, and a stronger-than-expected recovery in services. The report noted however that the better growth prospects have masked significant damage to economic activity from COVID-19.
The growth for FY 2022-23 is expected to slow to 7.5 per cent, the World Bank predicted.
According to the report, an enormous second Covid-19 wave is undermining the rebound in services and manufacturing activity in India. High-frequency data, including a renewed drop in foot traffic around work and retail spaces, suggests that activity is again collapsing.
The World Bank noted that fiscal and monetary policies remain accommodative in South Asia following an aggressive policy response in 2020 that included cuts in interest rates, increases in government expenditure, the extension of loans and guarantees, and steps to ensure financial stability.
The report found that the Covid-19 pandemic is expected to leave a legacy of higher poverty in the region with tens of millions of people anticipated to fall below the USD 1.90-a-day extreme poverty line this year. Further deprivation could come from higher food prices as global agricultural commodities have risen 30 per cent over the past year.
"With the recovery in early stages and the pandemic continuing to spread, the outlook is highly uncertain. Downside risks stem from high government debt, upward pressure on food prices, financial sector challenges, and the uncertain trajectory of Covid-19 and vaccination," it said.
Furthermore, the intersection of higher food prices and outbreaks of Covid-19 poses significant risks to vulnerable communities.
(With ANI inputs)
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