The World Bank has kept India’s growth forecast unchanged for June 2021 as the recovery is not yet broad-based.
In its Global Economic Prospects, the World Bank said that the economic damage caused by the second Covid wave has already recovered with the production of pre-Covid times following the easing of restrictions.
The World Bank’s estimate of 8.3 per cent is lower than the government’s first advance estimate 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 reduced monetary and fiscal policy support,” the report said.
However, sectors particularly vulnerable to the pandemic such as trade and hospitality are sluggish and are well below pre-pandemic levels.
In the context of inflation, easing supply disruptions and reduction in demand have led to an increase in prices. Core inflation remains at the upper end of the Reserve Bank of India’s (RBI) 2 per cent-6 per cent target range.
Whereas, the forecast for 2022-23 and 2023-24 has been upgraded to 8.7 per cent and 6.8 per cent respectively. This is mainly due to higher investment from the private sector, especially manufacturing, benefiting from the Production Linked Incentive (PLI) scheme and increased infrastructure investment.
“The growth outlook will also be supported by ongoing structural reforms, better-than-expected financial sector recovery and measures to address financial sector challenges despite existing risks,” it added.
Meanwhile, GDP estimates for the US were cut by 1.2 percentage points to 5.6 percent, and projected sharply lower growth of 3.7 percent in 2022 and 2.6 percent in 2023.
China’s GDP was expected to expand by 8 percent in 2021, about 0.5 percent lower than previously forecast, with growth slowing to 5.1 percent in 2022 and 5.2 percent in 2023.
WEF lists out top five risks facing India
In a separate report released by World Economic ForumIn this, it listed the top 5 risks that India faces.
The Global Risk Report 2022 states that India may face the following five risks:
* Fracture of interstate relations;
* debt – crisis;
*widespread youth disenchantment;
* Failure of technology governance; And
*digital inequality
It further said that governments globally are struggling to adopt climate-smart policies as COVID-19 impacts economic activity and forces them to focus instead on tackling rising social inequality.
Threats to social cohesion, such as widespread income and wealth inequality and wide gaps in access to vaccines around the world, emerged as another major concern in a WEF survey of nearly 1,000 business, government and educational leaders.
Furthermore, the report said, as the world enters the third year of the COVID-19 pandemic, the increasing reliance on digital systems has increased the risks posed by cyber security threats globally.
(with inputs from agencies)
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