Washington: The World Bank projected India's economy to grow at 8.3 per cent in 2021 and 7.5 per cent in 2022, even as its recovery is being hampered by an unprecedented second wave of COVID-19.
The Washington-based lender, in its latest Global Economic Prospects, noted that in India, an enormous second wave is undermining the sharper-than-expected rebound in activity seen during the second-half of fiscal year 2020-21, especially in services. In 2020, India's economy is estimated to have contracted by 7.3 per cent while in 2019, it registered a growth rate of 4 per cent.
A change of direction
According to the World Bank, in India, the 2021-22 budget marked a significant policy shift. The government announced that the health-related spending would more than double and set out a revised medium-term fiscal path intended to address the economic legacy of the pandemic.
Following deteriorating pandemic-related developments, the Reserve Bank of India (RBI) announced further measures to support liquidity provision to micro, small and medium firms, and loosened regulatory requirements on the provisioning for non-performing loans.
"In India, fiscal policy shifted in the 2021-22 budget toward higher expenditure targeted at healthcare and infrastructure to boost the post-pandemic recovery," said the World Bank. "The renewed outbreak, however, may require further targeted policy support to address the health and economic costs."
On March 31, the World Bank said India's economy has bounced back amazingly from the pandemic and nationwide lockdown over the last one year, but it is not out of the woods yet.
In April and May, India struggled with the second wave of the COVID-19 pandemic with more than 300,000 daily new cases. Hospitals were reeling under a shortage of medical oxygen and beds.