A citation by Bharatiya Janata Party (BJP) of International Monetary Fund (IMF) estimates, stating that India's 1.9% growth estimate for 2020 (corresponding to FY21) is the highest among major economies in a global economy battered by the COVID-19 pandemic, is misleading.
These numbers are part of the IMF's April World Economic Outlook (WEO) release and are not recent.
The April figures puts India as one of the few countries growing positively (1.9%) this fiscal, greater that China's (1.2%) and especially greater than many developed economies which are estimated to witness economic contraction.
However, the IMF's June WEO update have revised these same estimates to show that India's growth in the same period (FY21) would be (-) 4.5%. While this is still better than many major economies around the world, the data in June shares an estimate that China is still expected to grow at 1% this fiscal.
This citation also comes at a time when a cross-section of research houses, banks and even the Governor of the Reserve Bank of India have estimated that India's growth this fiscal would be negative.
The BJP tweeted on August 23, "While the world continues to grapple with economic bloodbath with major economies projected to register negative growth in the aftermath of #COVID pandemic, India will be a shining spot with positive growth in 2020. It will also retain its status of the fastest growing economy." An archive of the tweet can be found here.
While the world continues to grapple with economic bloodbath with major economies projected to register negative growth in the aftermath of #COVID pandemic, India will be a shining spot with positive growth in 2020. It will also retain its status of the fastest growing economy. pic.twitter.com/lELEbZaDl3— BJP (@BJP4India) August 22, 2020
The tweet carries a graphic a that outlines various growth estimates of economies around the world. It correctly cites the IMF as its source, but does not mention the reporting period. BOOM received the graphic on its helpline (7700906588), and it does not contain the BJP's watermark with its social media handles.
This graphic is viral on Twitter and on Facebook, with an MP from Uttar Pradesh, Rajesh Varma, too tweeting this (archive here).
GDP growth, 2020.— Pushpendra Kulshreshtha (@iArmySupporter) August 25, 2020
🇮🇳 India: 1.9% 🇮🇳
South Africa: -5.8%
That's power of 56 inch. 🇮🇳💪🇮🇳@narendramodi #WeLovePmModi
While the world continues to grapple with economic bloodbath with major economies projected to register negative growth in the aftermath of #COVID pandemic, India will be a shining spot with positive growth in 2020. It will also retain its status of the fastest growing economy. pic.twitter.com/HuhBQTxT98— Rajesh Verma (@MPRajeshVerma) August 22, 2020
The set of figures shared by the BJP are from the IMF's WEO in April, titled 'The Great Lockdown'. The report first spelt impending doom for the global economy first facing a string of lockdowns around world, mentioning that the global economy would contract (-)3%, worse than the 2008 financial crisis. The same report estimates that India would grow 1.9%, China 1.2%; with severe contractions in developed economies. The full April WEO report can be read here (note:triggers PDF download), with the highlights of this report available here. This figure has also been reported here and here.
In the IMF's June WEO update, titled 'A Crisis Like No Other, An Uncertain Recovery', many of these figures were revised downward. The full report of the June update can be downloaded here (note: triggers PDF download). "India's economy is projected to contract by 4.5 percent following a longer period of lockdown and slower recovery than anticipated in April", page 6 of the June report says. This figure pertains to India's fiscal year. The IMF states that in calendar year 2020, India will contract by 4.9%. This can be read in the June report's highlights here.
From an initial estimate of 1.9% in April, to an estimate of (-)4.5% in June is a swing of (-)6.4 percentage points. The IMF has also calculated this swing in its accompanying data set for the June WEO update, which can be downloaded here (note: triggers spreadsheet download). The (-)4.5% contraction estimate for India has also been reported here.
To know how do the IMF's estimates in April compare to its estimates in the June update for a variety of economies, you may interact with our graphic below.
Further, in its annual report for 2019 - 2020 released on Tuesday, the Reserve Bank of India has also acknowledged the projection of the IMF in June, citing their (-)4.5% forecast for the current fiscal year.
"In its latest update (June 2020), the IMF has projected global growth at (-) 4.9 per cent for 2020, with a steeply negative impact on economic activity in H1 and more gradual recovery than expected earlier. India's growth is projected at (-) 4.5 per cent for 2020-21."
This can be read on page 8 of the RBI's annual report here.
A growing consensus around economic contraction for India
This is not the RBI's first acknowledgement of potential contraction for the Indian economy. On May 22, Governor Shaktikanta Das said that the India's was poised for an economic contraction, but stopped short of giving an estimate.
"Given all these [lockdown and social distancing] uncertainties, GDP growth in 20-21 is estimated to be in negative territory", he said on May 22.
A number of other research bodies and banks have said that India will witness an economic contraction this year.
- Fitch and CRISIL see India contracting by 5%
- The research desk of the State Bank of India pegs India's contraction at 6.8%
- HSBC India predicts a contraction of 7.2%
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