World Bank maintains India’s growth outlook for FY22

The projection of 8.3 per cent is lower than the government’s first advance estimates of gross domestic product (GDP) of 9.2 per cent released last week and 9.5 per cent projected by the Reserve Bank of India (RBI)

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The World Bank has retained India’s economic growth forecast at 8.3 per cent for fiscal year 2021-22. In fact, the World Bank has kept the country’s growth estimate unchanged since June 2021 outlook.

In its Global Economic Prospects, the World Bank pointed out that the economic damage caused by the second Covid wave had played out and output was back to pre-Covid times. The projection of 8.3 per cent is lower than the government’s first advance estimates of gross domestic product (GDP) of 9.2 per cent released last week and 9.5 per cent projected by the Reserve Bank of India (RBI).

“The economy should benefit from the resumption of contact-intensive services, and ongoing but narrowing monetary and fiscal policy support,” the report said. Some sectors, however, like trade and hospitality have not done well and continue to remain below pre-pandemic levels.

In terms of inflation, easing supply disruptions and deficient demand has led to rise in prices. Core inflation remained at the upper end of the Reserve Bank of India.

The forecast for 2022-23 and 2023-24 has been upgraded to 8.7 per cent and 6.8 per cent, respectively. This was due to higher investment from the private sector, particularly manufacturing, benefiting

from the production-linked incentive (PLI) scheme, and increases in infrastructure investment. “The growth outlook will also be supported by ongoing structural reforms, a better than-expected financial sector recovery, and measures to resolve financial sector challenges despite ongoing risks,” it added.

Meanwhile, GDP projection for US was cut by 1.2 percentage points to 5.6 per cent, and forecast sharply lower growth of 3.7 per cent in 2022 and 2.6 per cent in 2023.

In a separate report released by the World Economic Forum, it listed top 5 risks that India faces:

* Fracture of interstate relations;

* Debt crisis;

* Widespread youth disillusionment;

* Failure of technology governance; and

* Digital inequality

It further said that globally governments wee struggling to adopt climate-smart policies as Covid-19 hits economic activity and forces them to focus instead on tackling surging social inequality.

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