The International Monetary Fund (IMF) on Tuesday cut its economic growth forecast for India to 9.5 percent for the fiscal year ending March 31, 2022 as the onset of a severe second COVID-19 wave cut into the recovery momentum.
This forecast for 2021-22 is lower than the 12.5 percent growth in GDP that IMF had projected in April before the second wave took a grip.
For 2022-23, IMF expects economic growth of 8.5 percent — higher than the 6.9 percent it had projected in April.
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“Growth prospects in India have been downgraded following the severe second COVID wave during March-May and expected slow recovery in confidence from that setback,” IMF said in its latest World Economic Outlook (WEO).
India’s economy is gradually recovering from a deep contraction in the fiscal year ended March 31, 2021 (7.3 percent) and a subsequent severe second wave of COVID-19.
IMF joins a host of global and domestic agencies which have cut India’s growth estimates for the current fiscal. Last month, S&P Global Ratings projected a 9.5 percent GDP growth in the current fiscal, and 7.8 percent in 2022-23.
While World Bank sees GDP growth at 8.3 percent from April 2021 to March 2022, the Asian Development Bank (ADB) last week downgraded India’s economic growth forecast to 10 percent from 11 percent estimated in April.
Another US-based rating agency Moody’s has projected India clocking 9.3 percent growth in the current fiscal ending March 2022. For 2021 calendar year, Moody’s has cut the growth estimate sharply to 9.6 percent.
The GDP, which shrank from $2.87 trillion in 2019-20 to $2.66 trillion in the following year, is estimated to reach around $4 trillion in 2024-25.
Overall, the global economy is projected to grow 6 percent in 2021 and 4.9 percent in 2022. The 2021 global growth forecast is unchanged from the April 2021 WEO, but with offsetting revisions, the report said.