Maintaining that the South Asian economic situation is worse than ever, the World Bank on Thursday said India’s gross domestic product (GDP) is expected to contract by 9.6% in the current financial year (April 2020 - March 2021) due to the national lockdown and pandemic shock.
In its latest report - South Asia Economic Focus - released on Thursday, the World Bank said the regional growth is expected to contract by 7.7 percent in 2020, after topping 6 percent annually in the past five years.
“India’s economy, the region’s largest, is expected to contract by 9.6 percent in the fiscal year. Regional growth is projected to rebound to 4.5 percent in 2021”.
For the region, the World Bank has projected “extreme poverty” and the “worst-ever recession” owing to the impact of the pandemic.
“The region is set to plunge in 2020 into its worst-ever recession as the devastating impacts of COVID-19 on South Asian economies linger on, taking a disproportionate toll on informal workers and pushing millions of South Asians into extreme poverty”, it said.
The Indian government enforced a strict lockdown from 25 March to break the chain of the contagious virus. The lockdown continued until the end of May, after which phased relaxations were introduced to open up the economy.
In May, Prime Minister Narendra Modi also announced a $266 billion stimulus package, while the apex bank pumped $125 billion in liquidity into the financial system to bail out the COVID-hit economy.
In fact, other multilateral organisations have also projected a steep contraction of the Indian economy in the current financial year. The Asian Development Bank (ADB) has said the Indian economy will witness a contraction of 9 percent due to the COVID-19 pandemic.
Goldman Sachs has said India's economy will witness a 14.8 percent contraction, while India Ratings maintains that the economy will see negative growth of 11.80 percent.