The World Bank, in its South Asia Economic Focus report, states that, in 2020-21 fiscal that started on April 1, India’s economy is expected to grow 1.5 percent to 2.8 percent. In 2019-20 fiscal that ended on March 31, it estimated India will grow 4.8 percent to 5 percent.
The World Bank stated that the coronavirus outbreak is severely disrupting the economy. Due to it, this fiscal year, India is likely to record its worst growth performance since the 1991 liberalization. The report also said that due to persistent financial sector weaknesses, India’s economy was already slowing down. The COVID-19 outbreak came at the same time.
The government imposed a lockdown to contain it. It restricted the mobility of goods and people, suspended flights, stopped trains and shut factories and businesses.
The report states that weak external demand will affect domestic supply and demand disruptions. It could result in a sharp growth deceleration in FY21 (April 2020 to March 2021). It also added that the services sector will be particularly impacted.
The World Bank states that as the impact of COVID-19 dissipates, in Fiscal 2022 (2021-22), growth is expected to rebound to 5% and the fiscal and monetary policy support pays off with a lag.
On the concerns about the COVID-19 outbreak, many international agencies have made a similar cut in growth estimates. The World Bank has joined the chorus.
In the current fiscal, the Asian Development Bank (ADB) observes India’s economic growth slipping to 4 percent. For the country, the GDP growth forecast has been further slashed by S&P Global Ratings to 3.5 percent from a previous downgrade of 5.2 percent. For India’s growth, Fitch Ratings puts its estimate at 2 percent. From 5.5 percent earlier, India Ratings & Research has revised its FY21 forecast to 3.6 percent.
During the 2020 calendar year, Moody’s Investors Service has also slashed its estimate of India’s GDP growth. It has been slashed to 2.5 percent from an earlier estimate of 5.3 percent.
The World Bank released the report on Sunday. For the South Asian region that comprises of eight countries, World Bank observes a growth by 1.8 – 2.8 percent this year. It is down from the 6.3 percent it projected six months ago.
Hans Timmer, World Bank Chief Economist for South Asia, in a conference call with reporters, stated that India’s outlook is not good.