New Delhi: Economy of India, South AsiaIt is expected to grow by 8.3% in the financial year 2021-22, aided by increased public investment and incentives to boost manufacturing, according to the 2014 report. world Bank and supported the move to a service sector-led growth model for the sector to strengthen reform.
The World Bank’s Fall 2021 economic update said “real GDP is expected to grow by 8.3% in the current fiscal, in line with the last forecast from June 2021, and 1.8 percentage points from forecast in March 2021.” Downside is the revision.” for South Asia. The growth rate for the next year is expected to be moderate to 7.5%. NS reserve Bank of India GDP growth in the current fiscal is projected to be 9.5%, while government officials say it could be closer to 10% given the rapid recovery. The uptick in vaccination has also provided comfort for a more sustained recovery.
It said the projected growth is supported by increased public investment to boost domestic demand and production-linked incentive schemes to boost manufacturing.
“Over the next two years, as the base effect subsides, the growth rate is expected to remain stable.
About 7%, aided by structural reforms to reduce supply side bottlenecks and
infrastructure investment. In the medium term, uncertainty about asset-quality deterioration from the pandemic, higher-than-expected inflation, and a slow recovery in the informal sector are the main downside risks,” according to the report.
Hans Timmer, the World Bank’s chief economist for South Asia, said the current GDP growth forecast of 8.3% is in line with a global report (Global Economic Prospects) published by the World Bank in June this year after the health crisis.
“Recent economic data is still in line with that number, in our view. During this pandemic, we have used a range of 7.5% – 12.5%% for India’s growth this year, due to uncertainties. The latest numbers indicate We are at the low end of that range,” Timer told TOI over email.
He said the main risk for India is the fragility of the financial sector. “Some of the risks in the financial sector are hidden by support measures, but the potential escalation of non-performing loans is a matter of concern. A second risk is another COVID-19 wave with new variants emerging. Hence further accelerating the vaccination programme. Very important. The third risk we are analyzing in the report is loss of momentum in the global economy,” Timmer said.
“I don’t have any prediction as to when and when RBI will cut interest rates. This will obviously depend on developments in global financial markets and monetary policy changes in major developed economies. It may also depend on inflation data, but at the moment inflation does not show strong evidence of higher domestic demand. This is a manifestation of rising energy prices globally and some remaining disruptions in global value chains,” said the World Bank’s chief economist for South Asia when asked about the RBI’s interest rate move.
He said that RBI has been very generous, and rightly so.
Not only with their interest rate, but also with regulatory tolerance measures and liquidity injection. This is all to help the firms survive the crisis period,” said Timmer.
Latest South Asia Economic Focus Title Shifting Gears: Digitization and services led development The sector is projected to grow at 7.1% in 2021 and 2022. While year-on-year growth in the sector remains strong, the recovery in 2020 has been uneven across countries and regions, from a very low base. South Asia’s average annual growth is projected to be 3.4% in 2020-23, down 3 percent from the four years before the pandemic.
“As countries build back, they have a chance to rethink their long-term development models. With the emergence of new digital technologies, South Asia has an opportunity to shift gears from the traditional manufacturing-based growth model and capitalize on the potential of its service sector,” according to the report.
“The role of services in the region’s economy is increasing amid rapid technological change and the accelerated structural change of global economic activity in response to the pandemic. The adoption of digital technologies makes services more tradable, enables services to increase productivity of sectors including manufacturing, and creates new markets. Some South Asian countries are increasingly providing professional and professional services that add value to manufacturing and play an important role in global value chains,” the report said.
The World Bank’s Fall 2021 economic update said “real GDP is expected to grow by 8.3% in the current fiscal, in line with the last forecast from June 2021, and 1.8 percentage points from forecast in March 2021.” Downside is the revision.” for South Asia. The growth rate for the next year is expected to be moderate to 7.5%. NS reserve Bank of India GDP growth in the current fiscal is projected to be 9.5%, while government officials say it could be closer to 10% given the rapid recovery. The uptick in vaccination has also provided comfort for a more sustained recovery.
It said the projected growth is supported by increased public investment to boost domestic demand and production-linked incentive schemes to boost manufacturing.
“Over the next two years, as the base effect subsides, the growth rate is expected to remain stable.
About 7%, aided by structural reforms to reduce supply side bottlenecks and
infrastructure investment. In the medium term, uncertainty about asset-quality deterioration from the pandemic, higher-than-expected inflation, and a slow recovery in the informal sector are the main downside risks,” according to the report.
Hans Timmer, the World Bank’s chief economist for South Asia, said the current GDP growth forecast of 8.3% is in line with a global report (Global Economic Prospects) published by the World Bank in June this year after the health crisis.
“Recent economic data is still in line with that number, in our view. During this pandemic, we have used a range of 7.5% – 12.5%% for India’s growth this year, due to uncertainties. The latest numbers indicate We are at the low end of that range,” Timer told TOI over email.
He said the main risk for India is the fragility of the financial sector. “Some of the risks in the financial sector are hidden by support measures, but the potential escalation of non-performing loans is a matter of concern. A second risk is another COVID-19 wave with new variants emerging. Hence further accelerating the vaccination programme. Very important. The third risk we are analyzing in the report is loss of momentum in the global economy,” Timmer said.
“I don’t have any prediction as to when and when RBI will cut interest rates. This will obviously depend on developments in global financial markets and monetary policy changes in major developed economies. It may also depend on inflation data, but at the moment inflation does not show strong evidence of higher domestic demand. This is a manifestation of rising energy prices globally and some remaining disruptions in global value chains,” said the World Bank’s chief economist for South Asia when asked about the RBI’s interest rate move.
He said that RBI has been very generous, and rightly so.
Not only with their interest rate, but also with regulatory tolerance measures and liquidity injection. This is all to help the firms survive the crisis period,” said Timmer.
Latest South Asia Economic Focus Title Shifting Gears: Digitization and services led development The sector is projected to grow at 7.1% in 2021 and 2022. While year-on-year growth in the sector remains strong, the recovery in 2020 has been uneven across countries and regions, from a very low base. South Asia’s average annual growth is projected to be 3.4% in 2020-23, down 3 percent from the four years before the pandemic.
“As countries build back, they have a chance to rethink their long-term development models. With the emergence of new digital technologies, South Asia has an opportunity to shift gears from the traditional manufacturing-based growth model and capitalize on the potential of its service sector,” according to the report.
“The role of services in the region’s economy is increasing amid rapid technological change and the accelerated structural change of global economic activity in response to the pandemic. The adoption of digital technologies makes services more tradable, enables services to increase productivity of sectors including manufacturing, and creates new markets. Some South Asian countries are increasingly providing professional and professional services that add value to manufacturing and play an important role in global value chains,” the report said.
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