The World Bank slashed India’s GDP growth estimate for the current fiscal year to 8.3% from its previous projection of 10.1%, citing the impact of the second wave of Covid. The multilateral agency is the latest in the long list of economists, investment banks and other agencies that have cut India's growth estimates due to the impact of the localised lockdowns imposed to prevent the spread of the second surge of the pandemic. Many now expect the economy to grow in single digits, sharply below the double digit projections made a few months ago. Cases have reduced now and the unlock process is underway across cities.
“India’s recovery is being hampered by the largest outbreak of any country since the beginning of the pandemic. Recent outbreaks have disproportionately affected India and, to a lesser extent, some other large EMDEs such as Brazil,” according to the World Bank’s Global Economic Prospects report.
It said that in India, an enormous second Covid-19 wave is undermining the sharper than-expected rebound in activity seen during the second half of FY 2020-21, especially in services. With surging Covid-19 cases, foot traffic around work and retail spaces has again slowed to more than one third below pre-pandemic levels since March, the report said.
“For India, GDP in fiscal year 2021-22, starting April 2021, is expected to expand 8.3%. Activity will benefit from policy support, including higher spending on infrastructure, rural development, and health, and a stronger-than-expected recovery in services and manufacturing,” the report said.
“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 localised mobility restrictions since March 2021, ” the report added.
