The World Bank said Monday that India’s economy will drop 3.2 percent on Monday, joining a merger of international organizations that are expected to see a drop in growth rates as a result of a disruption in economic activity following a coronavirus outage. A Washington-based multilateral lender said that the COVID-19 epidemic coupled with the multi-stage locks to curb down its spread have brutally devastated the Indian economy. In the latest edition of the global economic outlook, the World Bank has lowered its expectations for India by 9%. However, the World Bank predicts that the Indian economy will recover in 2021.
International rating agencies such as Fitch Rating, Moody’s Investors Service, and S&P Global Ratings predicted that India’s economic growth rate will get decrease by 4-5% from April 2020 to March 2021. Crisil said this would be the fourth recession in India since after the scenarios of independence, and liberalization introduction and possibly in the worst case. The World Bank said that despite some support from fiscal stimulus and continued monetary policy easing, the financial sector’s weak global growth and balance sheet stressed outflows will also impact its activities.
Central banks are buying government bonds so as to further ease their financial state, as per the reports. The Indian government has also increased spending on health care to strengthen COVID-19 response, wage support, in-kind and cash transfers to in-kind and low-income households, postponing tax payments, and lending and liquidity support to small businesses and finance. The growth rate of the Indian economy in 2017 was 7%, down to 6.1% in fiscal 2018 and 4.2% in fiscal 2020.
The World Bank predicted a negative growth rate of 3.2% from April to the current fiscal year (2020-21), which would pose the real impact of COVID-19 as well as the lockdown. The World Bank revised its January outlook for India to -9% in 2020 and -3% in 2021. According to the banks’ forecast, the Indian economy’s contraction will have a ripple effect in South Asia. Growth in the region is expected to record a shrinkage of -2.7% in 2020 and is characterized by high uncertainty, the report said.
The government has proclaimed a regulated exit strategy effective from 8th June 2020, under which a few more economic activities will be permissible across the country. It is the first of the three-phase plan for reviving the prohibited activities in the non-containment zones with a stringent set of Standard Operating Procedures which will are to carried by 30th June 2020.
