The World Bank stated that, the covid-19 outbreak has gravely disrupted the Indian economy, magnifying pre-existing risks to its outlook.
India is expected to record its worst growth performance since the 1991 liberalization, in this fiscal year as the coronavirus pandemic has severely disrupted the economy, the World Bank said on Sunday.
India’s economy is expected to grow 1.5 per cent to 2.8 per cent in the 2020-21 fiscal which started on April 1, the World Bank said in its South Asia Economic Focus report.
India’s growth is estimated at 4.8 per cent to 5 per cent in the 2019-20 fiscal that ended on March 31. The coronavirus outbreak came at a time when India’s economy was already slowing due to persistent financial sector weaknesses, the report said.
To contain it the pandemic, the government of India imposed a lockdown, closing factories and businesses, suspending flights, stopping trains and limiting mobility of goods and people.
“The resulting domestic supply and demand disruptions (on the back of weak external demand) are expected to result in a sharp growth deceleration in FY21 (April 2020 to March 2021),” it said, adding that the services sector will be specifically impacted.
A revival in domestic investment is likely to get delayed given increased risk aversion on a global scale, and renewed concerns about financial sector resilience.
“Growth is expected to rebound to 5% in Fiscal 2022 (2021-22) as the impact of COVID-19 dissipates, and fiscal and monetary policy support pays off with a lag,” the World Bank said.
The World Bank joins a group of international agencies that have made a similar estimation of growth recent days and concerns about the COVID-19 outbreak.