New Delhi: The World Bank expects India’s economy to contract 9.6% FY21, steeper than 3.2% shrinkage projected earlier.
South Asia as a region is set to plunge into its worst ever recession with a sharper than expected contraction of 7.7%, the World Bank said in its half-yearly South Asia Focus update released on Thursday.
India’s growth is projected to rebound to 5.4% in FY22, mostly reflecting base effects, assuming Covid19 -related restrictions are completely lifted by 2022. As per the bank, weak activity, domestically and abroad, is also likely to depress both Indian imports and exports.
India’s economy shrank an unprecedented 23.9% in the first quarter.
“India’s economy was already slowing before the pandemic. (Though) we are impressed by the government’s response with limited resources and fiscal space…the big problem is that the informal sector has no coverage. There are no systems in place to support those people,” said Hans Timmer, World Bank Chief Economist for the South Asia Region.
The report highlighted that informal workers are not generally covered by social insurance and few have savings or access to finance, and three-quarters of all workers in South Asia depend on informal employment.
“While the poor have faced rising food prices, the Covid-19 crisis has also affected informal workers in the middle of the income distribution who experienced sharp drops in earnings,” the bank said.
“The impact is not only on the poor but also people above the poverty line who have been hit hard,” said Timmer, adding that the self-employed and those in the services sector earlier had ways of absorbing the shocks but are unable to do so now.
Noting that there are serious vulnerabilities in India’s banking sector and solvency of firms, which are not being helped by the pandemic, he said the region will witness muted recovery as a whole and the case is the same for India.
South Asia as a region is set to plunge into its worst ever recession with a sharper than expected contraction of 7.7%, the World Bank said in its half-yearly South Asia Focus update released on Thursday.
India’s growth is projected to rebound to 5.4% in FY22, mostly reflecting base effects, assuming Covid19 -related restrictions are completely lifted by 2022. As per the bank, weak activity, domestically and abroad, is also likely to depress both Indian imports and exports.
India’s economy shrank an unprecedented 23.9% in the first quarter.
“India’s economy was already slowing before the pandemic. (Though) we are impressed by the government’s response with limited resources and fiscal space…the big problem is that the informal sector has no coverage. There are no systems in place to support those people,” said Hans Timmer, World Bank Chief Economist for the South Asia Region.
The report highlighted that informal workers are not generally covered by social insurance and few have savings or access to finance, and three-quarters of all workers in South Asia depend on informal employment.
“While the poor have faced rising food prices, the Covid-19 crisis has also affected informal workers in the middle of the income distribution who experienced sharp drops in earnings,” the bank said.
“The impact is not only on the poor but also people above the poverty line who have been hit hard,” said Timmer, adding that the self-employed and those in the services sector earlier had ways of absorbing the shocks but are unable to do so now.
Noting that there are serious vulnerabilities in India’s banking sector and solvency of firms, which are not being helped by the pandemic, he said the region will witness muted recovery as a whole and the case is the same for India.
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7 Comments on this Story
 | Devendra Yadav51 minutes ago This is our Modiâ s sympathy towards us to make Hindu rastra and people only need this |
 | Timir Ghosh1 hour ago Are the share markets are fools paradise! Of course not. Because thousands of ordinary Indians participate & subscribe to shares based on something- which are not visible these offshore Economists. They are just like any other urban folks- who sleep on data by Indian Urban intellectual folks, who are master in copying the data -then doctor on them- then publish to media. The real state of Economy will be known only in November - December when Agri income is visible and the export figures are updated after the festive seasons. As regards to Import- it will remain lowest of low level for next 6-9 months. That makes the Current account surplus to near $50 Billion from current $20 Billion. After that WBG will come and revise their forecast / podcast to convince others. India is most lucky this year in Rural economy and crop production with zero expenditure - has hurt urban lives & business badly- so is the shouting by these egghead urban intellectuals all alike. |
| Anand Deshpande1 hour ago Today equity market is almost same level before Covid, this may be because our finance minister and LIC, SBI securities are seeing green shoots in economy |