New Delhi: The second wave of the Covid-19 pandemic seen in India during the second half of FY21 is waning at a faster pace, said a World Bank report. The multilateral agency expects India’s FY22 GDP to be 8.3%, while it has pegged FY 202323 GDP growth at 7.5%.
Growth is expected to slow to 7.5% in FY 2023, reflecting the lingering impact of COVID-19 on domestic, corporate and bank balance sheets. Possibly low levels of consumer confidence, high levels of uncertainty over job and income prospects.
The World Bank says the pandemic will undermine consumption and investment in India, as confidence will be weakened and balance sheets will be damaged. However, it expects the global economy to expand by 5.6% in 2021.
For India, GDP is expected to expand by 8.3 per cent in the fiscal year 2021-22, starting April 2021. The activity will benefit from policy support, including higher spending on infrastructure, rural development and health, and higher-than-expected improvements in services and manufacturing.
Although the forecast has been revised up by 2.9 percentage points, it expects a huge second COVID-19 wave and significant economic damage from local mobility restrictions since March 2021. Activity is expected to follow the same, yet less pronounced, collapse and recovery seen during the first wave.
In India, a massive second COVID-19 wave is weakening the sharper-than-expected rebound in activity seen especially in services during the second half of FY 2020-21. With COVID-19 cases rising, foot traffic around work and retail spaces has again slowed by more than a third from pre-pandemic levels since March.
In India, the Budget for FY2021-22 marked a significant policy shift. The government announced that health-related spending would more than double and set out a revised medium-term fiscal path to address economic problems.
Following the worsening pandemic developments, the Reserve Bank of India announced further measures to support liquidity provision to micro, small and medium firms and to ease regulatory requirements on the provision of non-performing loans, the report said. of.
In India, fiscal policy shifted towards higher expenditure targeted on health care and infrastructure in the budget for FY 2021-22, to boost post-pandemic recovery. The report further noted that the new outbreak may require further targeted policy support to address the health and economic costs.