The World Bank on Tuesday, June 8, 2021, has projected the Indian economy to grow at 8.3% for the financial year 2021-22. This strong growth rate for India is anticipated despite the crippling impact of the second wave of COVID-19. Before the second wave, the World Bank had projected the economy to grow at 10.1%.
The World Bank had said economic activity in India would benefit from policy support, including higher spending on infrastructure, rural development and health, and higher-than-expected improvements in services and manufacturing.
Indian economy to grow more than global economy in FY22
In its report, the World Bank said the global economy is set to expand by 5.6 per cent in 2021-22 – its strongest post-recession pace in 80 years. India’s recovery is hampered by the biggest outbreak in any country since the start of the pandemic still, for India, GDP in the fiscal year 2021-22 starting from April 2021 is expected to expand by 8.3 per cent, which will be 2.7 per cent more than the global economy.
India will be the second-fastest growing economy in FY22
The World Bank’s Global Economic Prospects report states that India will be the second-fastest-growing major economy after only China, which is projected to grow at 8.5 per cent.
The report said fiscal policy in India shifted towards higher expenditure targeted on health care and infrastructure in the budget for the fiscal year 2021-22 to boost recovery from the pandemic. However, a renewed outbreak may require “targeted policy support” to address the health and economic costs.
GDP Projection by World Bank for FY22
- China – 8.5%
- India – 8.3%
- USA – 6.8%
- Mexico – 5.0%
- Brazil – 4.5%
- Indonesia – 4.4%
- Euro Area – 4.2%
India to be fastest economy in FY23
Growth in the financial year 2022-23 is expected to slow to 7.5 per cent reflecting the impacts of Covid-19 on household, corporate and bank balance sheets, possibly low levels of consumer confidence, and increased uncertainty on the job and income prospects. Nevertheless, according to the World Bank estimates, India will be the largest growing major economy in the financial year 2023.
GDP Projection by World Bank FY23
- India – 7.5%
- China – 5.4%
- Bangladesh – 5.1%
- Indonesia – 5.0%
- Euro Area – 4.4%
- USA – 4.2%
- Mexico – 3.0%
RBI’s projection for FY22
The RBI expects the GDP growth forecast for FY22 to be 9.5 per cent from the earlier estimate of 10.5 per cent. It expects GDP to grow at 18.5 per cent in Q1, 7.9 per cent in Q2, 7.2 per cent in Q3 and 6.6 per cent in Q4 of FY 2021-22.