India to grow FY21-22 in 7.5% -12.5% ​​range, expected 10.1%: World Bank

According to the World Bank’s South Asia Economic Focus, India’s economy is expected to grow in the year beginning April 1, 2021, as vaccine roll-out drives activity in contact-intensive areas. South Asia Vaccines Report good. However, given the significant uncertainty around epidemiological and policy factors, real GDP growth could range from 7.5% to 12.5%, stable at 6-7% in the medium term.

“It is not common to talk about these wide ranges in forecasts,” Hans Timmer, chief economist for the World Bank’s South Asia region, told reporters. “The reason is that we are in really unprecedented circumstances,” he said. It was difficult to forecast due to the size of the GDP hit and its nature. Mr. Timmer stated that the general rules of extrapolation were not useful at the moment.

The report highlights some difficulties in measuring GDP. For example, the epidemic is likely the reason for informal sector income – already hard to measure – to fall sharply. Also, it is difficult to measure the value of service sector transactions during epidemics. Increasing reliance on digital services will also cause estimation challenges in the future.

The epidemic is expected to register the worst economic damage in the fiscal year ending 31 March 2021, the report says (according to World Bank estimates the economy was 8.5% in FY 2015-21).

The bank expects public consumption to contribute positively, but the demand for privatization will accelerate by the end of 2021, as investment will come very slowly as a result of large government capital expenditures. Negative spillovers from the financial sector crisis (in particular, the cessation of negative measures, i.e. concessions to debtors) are a risk to the growth outlook, the report warns. However, the Reserve Bank of India (RBI) is expected to maintain a monetary monetary policy stance during the financial year ending March 2022.

“So there is a big boom in India, but not completely out of the woods yet,” Mr. Timmer said.

For the South Asia region as a whole, growth is projected at 7.2% in 2021 (calendar year) and 4.4% in 2022, setting the region on the road to recovery after a year of historically low growth has gone. Nevertheless, growth is not much below pre-COVID-19 estimates as businesses still have not made lost revenue and millions are out of work, facing falling incomes and rising inequalities, banks. According to.

“The next few months will mark the pace and success of the vaccine roll-out and optimism for customer spending and business,” the report said.

In relation to the second wave that is probably now operating in India and its impact on the economic outlook, Mr. Timmer said that these new waves of viruses and new variants were part of the risk factors for the approach. However, the government had learned from the lockdowns done earlier and its approach was “far more targeted”, he said.

He said, “Due to the fact that we are prone to disease, it does not mean that we will go back to the situation where we were a year ago.”