International Monetary Fund (IMF) chief economist Gita Gopinath has said its 2021 GDP numbers for India were locked on March 5, around the same time the country started seeing an upsurge in Covid-19 cases and that there could be a downward risk if the country goes for a nationwide lockdown.
Gopinath, speaking to India Today TV, said the IMF had made a smaller upgrade in its GDP projection from 11.5 percent earlier to 12.5 per cent for 2021. The IMF forecast was based on improvement in economic activity, normalisation, and recovery in high-frequency indicators, she said.
The IMF this week had raised its growth forecast for the Indian economy by 100 basis points to 12.5 per cent for the fiscal year 2021-22. The international monetary body expects India's GDP to grow 12.5 per cent in FY22, the highest among emerging and advanced economies. GDP growth for FY23 is pegged at 6.9 per cent.
Gopinath said about 0.2 per cent of the upward GDP forecast was added after February's Budget 2021, which announced major infrastructural investment plans for the current financial year.
Besides, she said, the latest GDP projections come on the back of about 8 percent contraction in the Indian economy in the previous fiscal year.
"And we locked in these numbers around March 5 when we started seeing the second Covid-19 wave in India. We assumed that there would be localised lockdowns just because until you get widespread vaccination, things will not get back to perfectly normal. If, on the other hand, there was a widespread nationwide lockdown, then that would be a downside risk to our forecast," she said.
She said while estimating the GDP forecast, the IMF had considered the localised lockdowns but they were early days before the second wave hit India.
"The important factor to keep in mind is the connection between the virus lockdowns and economic activity. What we have seen around the world and the situation in India too is that the sensitivity of economic activity to these kinds of containment measures came down," she said.
Gopinath, however, said still it was a conservative projection given the de-growth of 8 percent in 2020.
She asserted that India bouncing back to positive year-on-year growth was a positive sign but covering the gap was still a challenge. "The virus poses a downside risk and there is still a distance to go in terms of catching up," she said.
Meanwhile, the IMF has said India is the only country expected to register double-digit growth this fiscal. On the other hand, after an estimated contraction of -3.3 per cent in 2020, the global economy is projected to grow at 6 per cent in 2021, moderating to 4.4 per cent in 2022.
The unprecedented rise in Covid-19 cases in the second wave has put India on spotlight again. The country recorded 1,26,789 new Covid-19 cases in the last 24 hours for the first time since the beginning of the pandemic, setting a grim record. In the current week, India has seen over 1 lakh fresh COVID-19 cases four times -- April 4, April 5, April 7 and April 8.