World Bank estimate for Indian Economy

World Bank estimate for Indian Economy
 

News: According to the World Bank, India’s economy, South Asia’s largest, is expected to grow by 8.3% in the fiscal year 2021-22.
 

Details:
•  The South Asia economic focus report projects the region to grow by 7.1% in 2021 and 2022. It is a biannual economic update presenting recent economic developments and a near-term economic outlook for South Asia.
•  Other Major reports of the World bank include Human Capital Index, World Development Report. Recently, it has decided to discontinue the practice of issuing ‘Doing Business reports’.
•  The projected growth (8.3%) is supported by an increase in public investment to bolster domestic demand and schemes like the Production Linked Incentive (PIL) to boost manufacturing.
•  India’s Gross Domestic Product (GDP) increased by 20.1% in the first quarter (April-June quarter) of financial year 2021-22 in the backdrop of “a significant base effect, limited damage to domestic demand and strong export growth”.
•  In the first quarter of financial year 2020-21, GDP of India contracted by 24.4% because of nationwide coronavirus lockdown.The World Bank also observed that the disruption in India’s economy during the second wave of the pandemic was limited, compared to the first.
• Economic recovery across various sectors in India has been unequal.Manufacturing & construction sectors recovered steadily in 2021 but low-skilled individuals, self-employed people, women and small firms were left behind.
•  The extent of recovery in the financial year 2021-’22 will depend on how fast household incomes recover and activity across informal sector & smaller firms normalises.
•  India’s economic prospects will be determined by its pace of vaccination against Covid-19 and successful implementation of agriculture & labour reforms.
•  Economic data such as ‘GDP growth rate’ are calculated on a year-on-year basis.Thus, a low growth rate in the previous year leads to a low base for the number in the current year.
•  Risks associated with the extent of recovery include- worsening of financial sector stress, slowdown in vaccination, higher inflation constraining monetary-policy support etc.
 

Way forward:
•  It is time to start rethinking policies about medium term growth by learning lessons from Covid-19 like crisis.
•  It's time to build social protection and adopt greener policies, because the next shock might be from the environment.To reduce inequality, it is very important to integrate the informal sector and women into the economy. So that should be also an important element of the medium term growth strategy.
•  The Bank called on South Asian countries to lower entry barriers in the services sector, creating more national and international competition while curbing the “emergence of new monopoly powers”; aiding labour market mobility and upgrading of skills; and enabling the absorption of these new services by households and firms.