The World Bank has said that the coronavirus pandemic has severely disrupted the Indian economy. It added that the impact of the pandemic has magnified pre-existing risks to its outlook. The World Bank estimated the Indian economy to slow down to 5 per cent in 2020 and sharply decelerate to 2.8 per cent in 2021, as mentioned in its South Asia Economic Update: Impact of COVID-19 report. It said in the worst case scenario, growth would dip to 1.5 per cent.
The coronavirus lockdown imposed by the government has resulted in domestic supply and demand disruptions, the report stated. Revival in domestic investment is likely to be delayed due to enhanced risk aversion on a global scale, and renewed concerns about financial sector resilience.
However, the World Bank estimates that growth is likely to rebound to 5 per cent in fiscal 2022. In a conference call with reporters, World Bank Chief Economist for South Asia Hans Timmer said India's outlook is not very encouraging.
If the domestic lockdown is extended then the economic result can be worse than estimated, the World Bank says.
If a large-scale spread is avoided, early policy measures payoff, and restrictions to the mobility of goods and people can be lifted swiftly, growth for FY21 could be around 4 per cent, it said. However, if domestic contagion is not contained, and the nationwide shutdown is extended, growth projections could be revised downwards to 1.5 per cent, and fiscal slippages would be larger, the World bank said.
Nevertheless, India must focus on containing the disease and ensure that everyone has sufficient food, Timmer said. Focus on temporary job programmes at local levels, prevention of bankruptcies of MSMEs must be ensure by the government in its measures to rebound. Additionally, this will also be an opportunity to bring the Indian economy back on a sustainable path fiscally and socially.
The World Bank is working with India to cushion the impact of coronavirus. It has approved $1 billion to India. The first tranche has already been released for the health care sector.
INDIA CORONAVIRUS TRACKER: BusinessToday.In brings you a daily tracker as coronavirus cases continue to spread. Here is the state-wise data on total cases, fatalities and recoveries in one comprehensive graphic.