The International Monetary Fund (IMF) on Tuesday cut its economic growth forecast for India to 9.5 per cent for the fiscal year to 31 March 2022 as the onset of a severe second Covid-19 wave cut into recovery momentum. This forecast is lower than the 12.5 per cent growth in GDP that IMF had projected in April before the second wave took a grip.
IMF’s chief economist Gita Gopinath said the revision in growth forecast reflects an important “extent differences” in coronavirus disease (Covid-19) developments as the highly contagious Delta variant is becoming dominant across the world.
“Faster-than-expected vaccination rates and return to normalcy have led to upgrades, while lack of access to vaccines and renewed waves of Covid-19 cases in some countries, notably India, have led to downgrades,” Gopinath, economic counsellor and director of the research department at the IMF, said in a blog post.
For 2022-23, IMF expects economic growth of 8.5 per cent, larger than the 6.9 per cent it had projected in April.
“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 31 March 2021 (7.3 per cent) 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 per cent GDP growth in the current fiscal and 7.8 per cent in 2022-23.
While World Bank sees GDP growth at 8.3 per cent from April 2021 to March 2022, the Asian Development Bank (ADB) last week downgraded India’s economic growth forecast to 10 per cent from 11 per cent estimated in April. As for Moody’s, it has projected India clocking 9.3 per cent growth in the current fiscal ending March 2022. For 2021 calendar year, Moody’s has cut the growth estimate sharply to 9.6 per cent.
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 per cent in 2021 and 4.9 per cent in 2022. The 2021 global growth forecast is unchanged from the April 2021 WEO, but with offsetting revisions, the report said.