India’s GDP Expected to Shrink By 9.6% This Fiscal Yr: World Bank

India’s GDP has taken a significant hit due to the coronavirus outbreak.

(Photo: Altered by The Quint)

In the latest South Asia Economic Focus, the World Bank has predicted that India's economy, the region's largest, is expected to contract by 9.6 percent in the fiscal year starting March 2020.

The Indian economy is facing an unprecedented downturn with the projected growth sliding into an abyss as there is a need for critical reforms to reverse the sudden and steep impacts of COVID-19, said the World Bank .

The country's growth is projected to rebound to 5.4 percent in FY22, mostly reflecting base effects, assuming COVID-related restrictions are completely lifted by 2022. Weak activity, domestically and abroad, is also likely to depress both Indian imports and exports.

“The World Bank is partnering with the government to strengthen policies, institutions, and investments for building back better,” said Hartwig Schafer, World Bank Vice President for the South Asia Region.

Most of the workers in the South-Asian region depend on informal employment while the poor have been facing issues with the rising prices of food. The pandemic has also affected earnings for informal workers who have seen sharp drops.

“India is undertaking far-reaching reforms in its safety nets programme. This will help the country to preserve its hard-won gains against poverty as nearly half of all households are vulnerable and the majority of the workforce lacks formal social security benefits,” said Junaid Ahmad, World Bank Country Director in India.

With a majority of the population now working from home and discovering new opportunities, the way ahead has to be a cohesion of digital technologies and knowledge of deploying these technologies.

"COVID-19 will profoundly transform South Asia for years to come and leave lasting scars in its economies. But there is a silver lining toward resilient recovery: the pandemic could spur innovations that improve South Asia's future participation in global value chains, as its comparative advantage in tech services and niche tourism will likely be in higher demand as the global economy becomes more digital," said Hans Timmer, World Bank Chief Economist for the South Asia Region.

(With inputs from IANS)