New Delhi: India’s Economy, the largest in South Asia, is expected to grow by 8.3% in the fiscal year 2021-22, assisted by an increase in public investment and incentives to improve manufacturing, according to the latest report from the World Bank and with a model of growth model LED sector for the region to strengthen recovery.
“The real GDP in the current fiscal year is expected to grow by 8.3%, which is consistent with the last estimate from June 2021, and revisions 1.8 points down from estimates in March 2021,” the economic update of the 2021 World Bank.
for South Asia.
Growth is expected to be moderate to 7.5% next year.
Reserve Bank of India estimates GDP growth to 9.5% in the current fiscal year while government officials say it can be closer to 10% considering the ongoing sharp recovery.
Vaccination acceleration also has comfort for more sustainable recovery.
It is said that projected growth is supported by an increase in public investment to increase domestic demand and incentive schemes related to production to increase manufacture.
“For the next two years, as a basic effect of fading, growth is expected to stabilize around 7%, assisted by structural reforms to facilitate the side constraints of supply and infrastructure investment.
In the medium term, uncertainty surrounding the decline of the quality of assets of pandemics, higher inflation than Estimates, and slow recovery in the informal sector are the risk of the main decline, “according to the report.
Hans Timmer, World Bank Chief Economist for South Asia said the current GDP growth projection was 8.3% in line with the global report (global economic prospects) issued by the World Bank in June this year, after the health crisis.
“Economic data has recently been consistent with that number, in our view.
Throughout the pandemic, we have used the range for India’s growth this year from 7.5% – 12.5 %%, due to uncertainty.
The latest numbers show that We are at the lower end of the range, “Timmer told Toi via email.
He said the main risk for India was the fragility of the financial sector.
“Some risks in the financial sector are hidden by support measures, but the potential increase in bad credit is concerned.
The second risk is another Covid-19 wave with a new variant that appears.
That is why it is very important to accelerate vaccination programs.
The third risk we analyze In the report it is a loss of momentum in the global economy, “Timmer said.
“I have no predictions if and when the RBI will tighten interest rates.
This will obviously depend on the development of the global financial market and in changes in monetary policy in major developed countries.
This might also depend on the inflation rate, but when inflation does not show evidence Strong of the excess domestic demand.
This is more an expression of the increase in energy prices globally and some disorders in the global value chain, “said the World Bank’s chief economist for South Asia when asked about the RBI interest rates.
He said the RBI was very accommodating, and therefore.
Not only with their interest rate, but also with the steps of the patience of regulations and liquidity injections.
It’s all to help the company survive the crisis period, “Timmer said.
The latest South Asian economic focus entitled Shifting Gears: Digitization and Services-LED projects the region to grow by 7.1% by 2021 and 2022.
While year-to-year growth The year remains strong in the region, although from a very low base in Indonesia 2020, recovery is uneven in all countries and sectors.
The average annual growth of South Asia is estimated 3.4% more than 2020-23, which is 3 percentage points less than At four years before the pandemic.
“When countries rebuild, they have the opportunity to rethink their long-term development models.
With the advent of new digital technology, South Asia has the opportunity to shift gears from traditional manufacturing LED growth models and utilize the potential of their services, “according to the report.” The role of service in the regional economy has increased amid rapid technology changes and the acceleration of structural transformation of activities The global economy in responding to a pandemic.
Digital technology adoption makes services more traded, enabling services to increase other sector productivity – including manufacturing – and create new markets.
Some South Asian countries provide business and professional services that add value to producing and play a key role in the global value chain, “the report added.