GS Paper - 3 (Economy)

The World Bank retained India's economic growth forecast at 8.3 per cent for fiscal year 2021-22. The World Bank has kept India's growth estimate unchanged since June 2021 outlook as the recovery is yet to become broad-based.

What

  1. In its Global Economic Prospects, the World Bank said that the economic damage caused by the second Covid wave has already been unwound with output back to pre-Covid time after relaxation of restrictions.
  2. The World Bank's projection of 8.3 percent is lower than the government's first advance estimates of gross domestic product (GDP) of 9.2 per cent released last week and 9.5 per cent projected by the Reserve Bank of India (RBI).
  3. The economy should benefit from the resumption of contact-intensive services, and ongoing but narrowing monetary and fiscal policy support.
  4. However, sectors particularly sensitive to the pandemic, like trade and hospitality has lingered and remain below pre-pandemic levels.
  5. The growth outlook will also be supported by ongoing structural reforms, a better than-expected financial sector recovery, and measures to resolve financial sector challenges despite ongoing risks.

The Global Risks Report 2022 said India may face the following five risks:

  1. Fracture of interstate relations
  2. Debt crisis
  3. Widespread youth disillusionment
  4. Failure of technology governance
  5. Digital inequality