The World Bank has said India’s GDP is expected to further contract by 9.6% this fiscal as a reflection of the economic slump the country has suffered due to the national lockdown induced by the coronavirus pandemic.
The World Bank on Thursday said that the nationwide lockdown and the stoppage put on income household as well as industries' income due to the coronavirus pandemic has rendered the Indian economy in a situation worse than ever before.
World Bank, the Washington-based global lender, in its latest South Asia Economic Focus report ahead of the annual meeting of the World Bank and International Monetary Fund, forecasts a sharper than expected economic slump across the region. The bank has said regional growth is expected to contract by 7.7% in 2020.
“India’s GDP is expected to contract by 9.6% in the fiscal year that started in March,” the World Bank said on Thursday. Regional growth is projected to rebound to 4.5% in 2021, it said.
Factoring in population growth, however, income-per-capita in the region will remain 6% below 2019 estimates, indicating that the expected rebound will not offset the lasting economic damage caused by the pandemic, said the World Bank.
“The situation is much worse in India than we have ever seen before,” Hans Timmer, World Bank Chief Economist for South Asia told reporters during a conference call.
“It is an exceptional situation in India. A very dire outlook,” he said.
There was a 25% decline in GDP in the second quarter of the year, which is the first quarter of the current fiscal year in IndiaIn the report, the World Bank said that the spread of the coronavirus and containment measures have severely disrupted supply and demand conditions in India.
With the intent to contain the spread of Covid-19, Prime Minister Narendra Modi, with effect from March 25, announced a nationwide complete lockdown that brought as much as 70% of economic activity, investment, exports, and discretionary consumption to a standstill. Only essential goods and services such as agriculture, mining, utility services, some financial and IT services and public services were allowed to operate.