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World Bank cuts India’s growth forecast for 2021-22


The World Bank on Tuesday slashed India’s GDP (Gross Domestic Product) growth forecast for the fiscal year 2021-22 to 8.3 per cent from the earlier projected 10.1 per cent. It has said that the worst-ever second wave of the Kovid-19 epidemic has hurt economic revival. The lending multilateral institution has projected the economic growth rate to be 7.5 percent in 2022-23. The World Bank, in a new edition of the report titled Global Economic Prospects, said that India was witnessing a rapid revival in the second half of 2020-21, especially in the services sector, but the second wave of the Kovid-19 pandemic affected it. have been adversely affected.

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According to the institute, “India experienced the worst wave since the onset of the pandemic and adversely affected the economic revival.” It is noteworthy that in the financial year ended March 31, 2021, the economy declined by 7.3 percent, compared to a growth of 4 percent in 2019-20. In April this year, the World Bank had projected a 10.1 percent growth in GDP in 2021-22. This was higher than the 5.4 per cent increase reported in January. But now the estimate has been scaled down. The multilateral institution has projected the economic growth rate to be 6.5 percent in 2023-24. The World Bank report said that the global economy is expected to grow by 5.6 percent in 2021. If that happens, it will be the strongest growth since the recession in 80 years.

It said, “India’s GDP is expected to grow by 8.3 percent in 2021-22 (April-March). According to the report, policy support, including higher expenditure on infrastructure, rural development and health, and a higher-than-expected revival in services and manufacturing will accelerate activities. The estimates for the financial year 2021-22 have taken into account the damage to the economy due to the second wave of Kovid-19 and the local level restrictions imposed from March 2021 for its prevention. “The pandemic will have an adverse impact on consumption and investment as confidence is already weak and books have been adversely affected,” the report said. The growth rate is expected to slow down to 7.5 per cent in the financial year 2022-23. This reflects the cascading impact of COVID-19 on households, companies and banks’ books, weakening customer confidence and uncertainty in employment and income.

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Regarding the global economy, it has been said in the report that it will grow by 5.6 percent in 2021. If it does, it will be the strongest growth in 80 years post-recession. This is mainly because of the strong revival in some of the major economies. However, despite the revival, global production will be 2 per cent lower this year than pre-pandemic estimates. Among the major economies, the US is projected to grow 6.8 percent this year. The reason for this is large-scale fiscal support and easing of restrictions related to the pandemic. Growth in other developed countries will be strong but at a slower pace.

According to the report, China’s growth rate in emerging and developing countries is expected to be 8.5 percent in 2021. This is because of an uptick in suppressed demand. World Bank Group President David Malpass said, “Globally there are signs of revival, but the pandemic has led to increased poverty and inequality in developing countries.” And coordinated efforts are necessary to accelerate debt relief. As the health crisis subsides, policymakers will need to take steps to address the lasting effects of the pandemic and promote green, robust and inclusive growth while ensuring broader economic stability.”

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World Bank cuts India's growth forecast for 2021-22
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