India will grow 8.3% in the ongoing fiscal year (April 2021 to March 2022), the World Bank said in its latest 'Global Economic Prospects' report, bumping up India's forecast by 2.9 percentage points since its January 2021 projections.
This upgrade also lends itself to a shot in the arm to the overall growth of South Asia, which will grow at 6.8% this calendar year, an increase of 3.6 percentage points since its January forecast.
However, this is till below 10.1% estimate it had provided for India in April.
These estimates are slightly lower than that released by the Reserve Bank of India on June 4, where is estimates that the Indian economy will grow by 9.5% this year, revised downward by one percentage point from 10.5%.
The World Bank says that the Indian economy will benefit from policy support, higher spending on infrastructure, rural development, health and better than expected recovery in the services and manufacturing sector.
"Although the forecast has been revised up by 2.9 percentage points, this masks significant expected economic damage from an enormous second COVID-19 wave and localized mobility restrictions since March 2021", the report adds.
These estimates take into account the wreckage of life and livelihood during the ongoing second wave of the COVID-19 pandemic. "In South Asia, India's recovery is being hampered by the largest outbreak of any country since the beginning of the pandemic", says the report. "The situation is particularly serious in India, where the number of daily deaths and cases is now higher than in any other country during the pandemic. For the region as a whole, peaks in daily new confirmed cases and deaths in 2021 are multiple times higher than last year", the report adds.
In FY23, however, these projections show that growth in the Indian economy will slow marginally; growing at 7.5%. The reports attributes this slowdown to consumption remaining depressed and balance sheets weaker. This would reflect the damage that COVID-19 would have done to households, corporations and banks, and could see low levels of consumer confidence and uncertainty on job and income prospects.
The world economy will grow 5.6%. The world's largest economy - the United States of America - will grow a massive 6.8%.
China, which has posted a growth of 2.3% in a year where most of the world economy has declined, will continue to grow in 2021 and 2022. In fact, in 2021, China will outpace India by 0.2 percentage points and is forecasted to grow at 8.5%, shows data from the report. The US and China will each contribute a quarter of global growth in 2021.
Read the full report here.
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