The World Bank has estimated India's GDP growth to be between 7.5-12.5 percent during FY22. For the fiscal year ending today, contraction in GDP is estimated to be at 8.5% in comparison to 4% growth in FY 2020.
In its report titled 'Sour Asia Economic Focus Spring 2021: South Asia Vaccinates' the World Bank said its growth estimates for the upcoming year is "depending on how the ongoing vaccination campaign proceeds, whether new restrictions to mobility are required, and how quickly the world economy recovers".
Moreover it said as the economic activity stabilizes in the country and in major export markets, the current account shall return to minor deficit of close to 1 percent in FY22 and FY23 and capital inflows shall sustain given the accommodative monetary policy as well as abundant liquidity conditions world-over.
"The Covid-19 shock will lead to a long-lasting inflexion in India's fiscal trajectory. The general government deficit is expected to remain above 10 percent of GDP until FY22," report said. Also, the public debt will soar to almost 90% of GDP in FY21 before gradually inching lower thereafter.
As per the report, as growth picks up pace and there is improvement seen in the prospects of the labour market, reduction in poverty is expected to return to its pre-pandemic scale. . "The poverty rate (at the $1.90 line) is projected to return to pre-pandemic levels in FY22, falling within 6 and 9 percent, and fall further to between 4 and 7 percent by FY24 (FY 2023-24)," it said.
Moreover, the Bank said the Indian economy was already witnessing slow growth when the Covid 19 disruption was brought about. And from 8.3 percent growth in Fy17, GDP declined to just 4 percent in FY20. The slowdown was led by a decline in private consumption as well as because of the failure of a large NBFC company that slowed down investment landscape in the country.