The International Monetary Fund on Tuesday upgraded India's growth projections to 12.5% in fiscal year [FY] 2022 (April 2021 to March 2022) according to its latest World Economic Outlook (WEO) titled 'Managing Divergent Recoveries'. In FY23, this growth will slow down to 6.9%.
This estimate is a one percentage point (100 basis points) bump over its January WEO, when its projected that India will grow 11.5% in the same period.
In calendar year terms (the year 2021), the growth projection in 2021 is 11.3%.
This double-digit growth boost - which at outpaces the world economy more than twice, which is estimated to grow at 6% - comes at the back of a base effect caused due to record contraction.
In FY21, the Indian economy took a beating worse than its global peers due to the ongoing COVID-19 pandemic. The IMF estimates a 8% contraction in FY21, which ended nearly a week ago. In calendar year terms (which is the year 2020), India is slated to have contracted 7.1%. In contrast, the world is estimated to have only contracted 3.3%.
The world economy's growth projections have also been upgraded marginally. In January's WEO, it was 5.5% which has been bumped up to 6% now. In 2022 (calendar year), this figure has been increased from 4.2% in the January WEO to 4.4% right now.
Contrary to economic growth, where a country's economy becomes larger, an economic contraction or shrinkage indicates that the economy becomes smaller.
"High uncertainty surrounds this outlook, related to the path of the pandemic, the effectiveness of policy support to provide a bridge to vaccine-powered normalization, and the evolution of financial conditions", states the report.
But the IMF's Chief Economist, Gita Gopinath, sees light at the end of the tunnel. "Yet, even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible. Thanks to the ingenuity of the scientific community hundreds of millions of people are being vaccinated and this is expected to power recoveries in many countries later this year", she states in a blog post.
Here's the growth outlook for a select number of other jurisdictions globally. The projections for most countries and jurisdictions have been upgraded but only modestly, keeping in line with the overarching theme of this report that represents the uneven pace at which economies around world limp back to normalcy.
The International Monetary Fund is the latest international organisation to estimates double digit growth.
Last week, the World Bank upgraded it's own estimates by 4.7 percentage points to 10.1%, though it kept it in a range from 7.5% to 12.5% to factor in COVID-19 related uncertainties.
The Monetary Policy Committee of the Reserve Bank of India is expected to keep its own estimate of the economy at 10.5% when it meets on April 7. The Economic Survey, presented before the Budget, estimates this growth figure to be 11%.
Read the latest WEO report here.