With the second wave of coronavirus, India’s GDP is cut down by the World Bank for the fiscal year 2021-22 from 11.2 % to 8.3 %.
The slashing down of GDP by the World Bank will benefit the economy with the policy support, including higher spending on infrastructure, rural development, and health, and a stronger-than-expected recovery in services and manufacturing.
By 2.9 % points, the GDP forecast got revised, making significant expected economic damage from the pandemic wave.
In its forecast on South Asian economies, the World Bank said the Covid-19 pandemic will undermine consumption and investment in India with the depressing balance sheets.
The growth forecast for FY23 has also been cut to 7.5 percent, with the negative impacts of Covid everywhere.
RBI Governor Shaktikanta Das has revised the estimate by 10.5% in the monetary policy committee announcement on June 4. The RBI expects GDP to grow at 18.5 percent in the first quarter, 7.9 percent in the second quarter, 7.2 percent in the third quarter, and 6.6 percent in the fourth quarter of 2021-22.
The fiscal policy reported in India shifted in the FY22 budget towards higher expenditure targeted at healthcare and infrastructure to boost post-pandemic recovery, with further revised policies.
Most of the professional rating agencies and prominent economists have slashed their GDP growth forecasts for FY22.
Among other Asian economies, Bangladesh is recovering its economy gradually with a growth of 3.6% in the fiscal year 2020/21.
In Sri Lanka, the resurgence of COVID-19 cases, severe fiscal pressures, and depressed tourism is leading to the laggard of the economy.
Pakistan has come up with a revised policy with improved remittance inflows and a positive rebound, yet the expected economic growth is only 1.3% in FY21.