On March 31, 2021, The World Bank reported its South Asia Economic Focus report for the year 2021, titled “Sour Asia Economic Focus Spring 2021: South Asia Vaccinates” and it has estimated India’s GDP (Gross Domestic Product) growth to be in the range of 7.5% to 12.5% for the Financial year 2021-22 (FY22) and contraction of 8.5% (-8.5%) for FY21.
Key points of the report:
- The World Bank has increased the GDP growth rate of India by 4.7% to 10.1% for FY22, due to private consumption and investment growth. It has reported a 5.4% growth in its January report.
- The poverty rate (at the $1.90 line) for the South Asian group is projected to be within 6% and 9% in FY22, and between 4% and 7% by FY24.
World Bank’s projection for India:
- The growth for FY22 was estimated based on the proceedings of the vaccination campaign, recovering of world economy and restrictions to mobility.
- The general government deficit is expected to remain above 10% of GDP until FY22 and which will result in public debt at a peak of almost 90% of GDP in FY21.
- The current account is expected to return to mild deficits of around 1% in FY22 and FY23.
- World Bank’s projection compared well with IMF which predicted GDP growth rate to be 11.5 per cent during FY22 and Economic Survey which forecast it at 11%.
- The government’s consumption is expected to rise by about 16.7% during FY21.
- It expected that Covid-19 might lead to a long-lasting inflexion in India’s fiscal path.
- As South Asian countries’ growth resumes and the labour market prospects improved, poverty reduction is expected to return to its pre-pandemic track.
- The income gap between the poorest (90% of the population) and the richest (10%) was widened even further in India due to COVID-19 by 13.2% points.
Recent Related News:
According to the Global Economic Prospects (GEP-January 2021) report released by the World Bank (WB), India is expected to grow at 5.4% in the Financial Year (FY) 2021-22 & 5.2% in FY 2022-23 after an expected contraction of 9.6% in FY 2020/21. The Global Economy is expected to expand by 4% in 2021.
About World Bank:
Establishment – 1944 as The International Bank for Reconstruction and Development
President – David Robert Malpass
Headquarters – Washington, D.C., United States