World Bank Predicts Indian Economy To Contract By 9.6% As Economic Recession Continues

The Indian economy hit a rough patch in 2020 with the coronavirus pandemic further hampering the economy on the decline.

According to a report by the World Bank, India¡¯s economy is estimated to contract by 9.6 per cent in the fiscal year 2020-21, reflecting a sharp drop in household spending and private investment, and the growth is expected to recover to 5.4 per cent in 2021.

In its Global Economic Prospects report, the World Bank said that the informal sector, which accounts for four-fifths of employment, has been subject to severe income losses during the COVID-19 pandemic.

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Pandemic hit the economy real bad

"In India, the pandemic hit the economy at a time when growth was already decelerating. The output is estimated to contract by 9.6 per cent in Fiscal Year 2020/21, reflecting a sharp drop in household spending and private investment," it said.

"In India, growth is expected to recover to 5.4 per cent in 2021, as the rebound from a low base is offset by muted private investment growth given financial sector weaknesses," the bank said.

GDP hits a six-year low

Earlier in 2019, economic growth slipped further to hit an over six-year low of 4.5 per cent in July-September, PTI reported.

The previous low was recorded at 4.3 per cent in the January-March period of 2012-13. The Gross Domestic Product (GDP) growth was registered at 7 per cent in the corresponding quarter of 2018-19.

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According to the World Economic Forum¡¯s Global Social Mobility report, in India, it would take 7 generations for a member of a poor family to achieve average income; in Denmark, it would take just 2 generations to do so.

IMF slashes India forecast

In October 2019, the International Monetary Fund projected that India's economy will contract by a huge 10.3 per cent this year because of the coronavirus pandemic, the biggest slump of any major emerging nation and the worst since independence.

Even before the pandemic, Asia's third-largest economy was struggling to gain traction, and the hit to global activity from the virus and one of the world's strictest lockdowns combined to deal the country a severe blow, AFP said in a report.

In its latest report on the global economy, the IMF forecasts that India's gross domestic product will plunge 10.3 percent this fiscal year ending on March 31, 2021, the biggest contraction since independence.

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The IMF expects India to grow 8.8 per cent in 2021.

Between April and June the Indian economy shrank 23.9 percent, official figures showed, as the harsh lockdown imposed in March slowed activity to a near-halt.

The shutdown in the vast country of 1.3 billion people left vast numbers of people jobless almost overnight, including tens of millions of migrant workers in the shadow economy.