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World Bank: India’s economy is growing by 8.3%, making it 2nd among the fastest growing major economies | Companies

UNITED NATIONS (IANS) – India’s economy is expected to grow by 8.3 percent this fiscal year, according to the World Bank, making it the second fastest growing major economy.

The bank’s Regional Economic Update, released October 7, said that following the “deadly second wave” of Covid-19 in India, “the increasing pace of vaccination will determine the economic outlook for this year and beyond.”

“The course of the pandemic will dampen prospects in the short term until herd immunity is achieved,” she warned.

According to the update, released ahead of the bank’s annual meeting next week, India’s gross domestic product – which has contracted 7.3 percent (i.e., minus 7.3 percent) under the onslaught of the pandemic last fiscal year – is expected 8, 3 percent growth this fiscal year, which will slow to 7.5 percent next year and 6.5 percent in 2023-24.

Of the major economies, China leads the way with expected economic growth of 8.5 percent in the current calendar year, after the bank revised it up from 8.1 percent in April.

China’s growth rate is expected to drop to 5.4 percent next year and 5.3 percent in 2023. Last year it grew by 2.3 percent.

For the entire South Asia region, the bank’s update estimates GDP growth this year and next at 7.1 percent.

The Maldives’ tiny economy of $ 3.8 billion, which saw the sharpest decline of 33.6 percent last calendar year, is expected to rebound and grow 22.3 percent this year. Next year it is expected to drop to 11 percent and in 2023 to 12 percent.

Bangladesh, which posted 5 percent growth in the past fiscal year, is expected to grow 6.4 percent this year and 6.9 percent next year.

Pakistan’s economy, which grew 3.5 percent last fiscal year, is expected to grow 3.4 percent this year and 4 percent next year.

For Sri Lanka, the bank expects growth of 3.3 percent this calendar year compared to a decrease of 3.6 percent in the previous year and growth of 2.1 percent in the next year and 2.2 percent in the following year.

Bhutan, which posted negative growth of 1.2 percent in the last fiscal year, is expected to reach 3.6 percent this fiscal year and 4.3 percent in the next fiscal year.

Nepal’s growth is expected to recover from 1.8 percent in the last fiscal year to 3.9 percent this year and 4.7 percent in the next.

The bank said: “The Covid-19 pandemic drove India’s economy into deep contraction in FY21 (FY 2020-21) despite well-designed fiscal and monetary support.”

Growth recovered in the second half of the last fiscal year “mainly driven by investment and aided by the ‘unleashing’ of the economy and targeted fiscal, monetary and regulatory measures. Growth in manufacturing and construction recovered steadily.”

Although significantly more people were killed during the second wave of the epidemic in India this year compared to the first wave in 2020, “economic disruption has been limited as restrictions have been localized,” with GDP around in the first quarter of the year According to the update, the current financial year grew by 20.1 percent compared to the first quarter of 2020-21.

She attributed the increase to “a significant base effect” (ie a very sharp drop in the comparable quarter), “strong export growth and limited damage to domestic demand”.

Looking ahead, the bank’s update states that “successful implementation of agricultural and labor market reforms would boost medium-term growth,” but warns that “weakened household and corporate balance sheets could limit it”.

“The production-related incentive program to stimulate production and a planned increase in public investment should support domestic demand,” it said.

The extent of the recovery in the current financial year “will depend on how quickly household incomes recover and activity in the informal sector and in smaller businesses normalizes”.

Risks included “an exacerbation of stress in the financial sector, unexpectedly high inflation curbing monetary support and a slowdown in vaccination.”

Taking stock of the impact of the pandemic, the bank said, “The toll of the crisis has not been equal and the recovery so far has been uneven, leaving the most vulnerable sections of society – the low-skilled, women, the self-employed and small businesses.”

However, the Indian government has taken steps to strengthen social safety nets and alleviate structural supply bottlenecks through agricultural and labor reforms to tackle inequality.

It stated that the government continued to invest in health programs that “have begun to address the weaknesses in health infrastructure and social safety nets (particularly in urban areas and the informal sector) exposed by the pandemic”.

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