Virendra Pandit
New Delhi: Amid an unprecedented spike in Covid-19 infections in some states, which may potentially derail the economic recovery, the International Monetary Fund (IMF) has raised its growth projection for India by at least one percentage point for the current fiscal 2021-22, and also revised it upwards for the next financial year.
In the IMF’s latest World Economic Outlook (WEO) report, released on Tuesday, India was projected to grow at 12.5 percent during FY22. This is the highest not just among emerging economies, but also among the advanced economies.
Accordingly, India will be the only country estimated to register double-digit growth. For FY21, the IMF had estimated the GDP to contract by 8 percent.
In January 2021, the IMF’s projection for the current fiscal (FY22) was 11.5 percent. For FY23, it had a forecast of 6.8 percent, which in the latest report has been revised to 6.9 percent.
India’s improving performance will have an impact on the ‘Emerging and Developing Asia’ regional group.
“For the Emerging and Developing Asia regional group, projections for 2021 have been revised up by 0.6 percentage point, reflecting a stronger recovery than initially expected after lockdowns were eased in some large countries (for example, India),” the WEO report said.
However, still high Covid-19 caseloads in some large countries in 2020-21 (such as Indonesia and Malaysia) put a lid on the growth prospects, it added.
Ironically, the IMF’s optimism has come when India is struggling to contain the pandemic’s second wave and registered one lakh-plus Covid-19 cases in a single day.
But the Fund’s optimism is matched by a report prepared by the Economic Affairs Department of the Finance Ministry, released on April 5. It said: “As the vaccination drive continuously upscales in India, and guided by the learnings of successful management of the pandemic during its first wave, India is now well armed to combat any downside risk posed by the recent surge in Covid-19 cases. With the end of a challenging FY 2020-21, the crest of a brighter and self-reliant FY 2021-22 awaits India!”
About the global outlook, the IMF report projected the international economy to grow at 6 percent in 2021 as against a contraction of 3.3 percent in 2020. Also, it expected the global economy to moderate to 4.4 percent in 2022.
“The contraction for 2020 is 1.1 percentage points, smaller than projected in the October 2020 WEO, reflecting the higher-than-expected growth outturns in the second half of the year for most regions after lockdowns were eased and as economies adapted to new ways of working,” it said.
The projections for 2021 and 2022 are 0.8 percentage point and 0.2 percentage point stronger than in the October 2020 WEO, reflecting additional financial support in a few large economies and the anticipated vaccine-powered recovery in the second half of the year.
“Global growth is expected to moderate to 3.3 per cent over the medium term — reflecting projected damage to supply potential and forces that predate the pandemic, including aging-related slower labour force growth in advanced economies and some emerging market economies.”
