Indian economy will grow at 8.3% in 2021, says World Bank – Times of India

NEW DELHI: Indian economy is expected to expand 8.3 per cent in fiscal year 2021-22, a report by World Bank projected on Tuesday.
In its latest issue of Global Economic Prospects, the Washington-based global lender said that even though the forecast has been revised up by 2.9 percentage points, its masks significant expected economic damage from the second wave of Covid-19.
Besides, it projected the global economy to grow 5.6 per cent this year, up from the 4.1 per cent it forecasted in January. It said that Covid vaccinations and stimulus given by various central governments will power the fastest worldwide expansion in nearly five decades.
Here are some highlights from the report:
* In India, an enormous second Covid-19 wave is undermining the sharper-than-expected rebound in activity seen during the second half of FY2020-21, especially in services.
* With surging Covid cases, foot traffic around work and retail spaces has again slowed to more than one-third below pre-pandemic levels since March, in part due to greater restrictions on mobility.
* However, India will benefit from policy support, including higher spending on infrastructure, rural development, and health, and a stronger-than expected recovery in services and manufacturing.
* Growth in FY2022-23 is expected to slow to 7.5 per cent reflecting lingering impacts of Covid-19 on household, corporate and bank balance sheets; possibly low levels of consumer confidence; and heightened uncertainty on job and income prospects.
* In 2020, India’s economy is estimated to have contracted by 7.3 per cent while in 2019, it registered a growth rate of four per cent, the World Bank said, adding that in 2023, India is expected to grow at 6.5 per cent.
* Domestic financial conditions are easier than they have been in decades. These conditions may change, however, if rapid recoveries in advanced economies lead to tightening monetary policy in these economies before recoveries are entrenched.
* India accounts for nine-tenths of the upgrade to growth in 2021, as strong services activity more than offsets the economic effects of the worsening pandemic.
* Fiscal policy shifted in the FY2021-22 budget toward higher expenditure targeted at health care and infrastructure to boost the post-pandemic recovery.
* The renewed outbreak, however, may require further targeted policy support to address the health and economic costs.
* While US economy is expected to expand 6.8 per cent in 2021, up from the 3.5 per cent it forecast in January; China — the world’s No. 2 economy and the first to emerge from the coronavirus recession — is forecast to grow 8.5 per cent in 2021 after expanding just 2.3 per cent last year.