World Bank sees FY21 India growth at 1.5-2.85% - slowest since economic reforms three decades back
India is likely to record its worst growth performance since the 1991 liberalisation this fiscal year as the coronavirus outbreak severely disrupts the economy, the World Bank said.
India's economy is expected to grow 1.5 percent to 2.8 percent in the 2020-21 fiscal which started on April 1, the World Bank said in its South Asia Economic Focus report.
It estimated India will grow 4.8 percent to 5 percent in the 2019-20 fiscal that ended on March 31.
The COVID-19 outbreak came at a time when India's economy was already slowing due to persistent financial sector weaknesses, the report said.
To contain it, the government imposed a lockdown, shutting factories and businesses, suspending flights, stopping trains and restricting mobility of goods and people.
"The resulting domestic supply and demand disruptions (on the back of weak external demand) are expected to result in a sharp growth deceleration in FY21 (April 2020 to March 2021)," it said, adding that the services sector will be particularly impacted.
A revival in domestic investment is likely to be delayed given enhanced risk aversion on a global scale, and renewed concerns about financial sector resilience.
"Growth is expected to rebound to 5% in Fiscal 2022 (2021-22) as the impact of COVID-19 dissipates, and fiscal and monetary policy support pays off with a lag," the World Bank said.
The World Bank joins a chorus of international agencies that have made a similar cut in growth estimates in recent days on concerns about the COVID-19 outbreak.
The Asian Development Bank (ADB) sees India's economic growth slipping to 4 percent in the current fiscal, while S&P Global Ratings has further slashed its GDP growth forecast for the country to 3.5 percent from a previous downgrade of 5.2 percent.
Fitch Ratings puts its estimate for India growth at 2 percent, while India Ratings & Research has revised its FY21 forecast to 3.6 percent from 5.5 percent earlier.