World Bank Report- Shifting Gears: Digitization and Services-Led Development
As per World Bank’s report titled “Shifting Gears: Digitization and Services-Led Development”, Indian economy is expected to increase by 8.3% in the fiscal year 2021-2022.
Key findings of report
- As per report, in the next financial year, India’s economic prospects will be determined by its pace of vaccination against covid-19 and successful implementation of agriculture & labour reforms.
- India’s Gross Domestic Product (GDP) increased by 20.1% in first quarter (April-June quarter) of financial year 2021-22 in the backdrop of “a significant base effect, limited damage to domestic demand and strong export growth”.
- In the first quarter of financial year 2020-21, GDP of India was contracted by 24.4% because of nationwide coronavirus lockdown.
- The World Bank also observed that the disruption in India’s economy during the second wave of the pandemic was limited, compared to the first.
World Bank on economic recovery
As per World Bank report, economic recovery across various sectors in India has been unequal. Manufacturing & construction sectors recovered steadily in 2021. But, low-skilled individuals, self-employed people, women and small firms were left behind.
Economic data such as ‘GDP growth rate’ are calculated on year-on-year basis. Thus, a low growth rate in the previous year leads to low base for the number in current year.
How India will recover?
As per report, the extent of recovery in financial year 2021-’22 will depend on how faster household incomes recover and activity across informal sector & smaller firms normalises.
What are the risks?
Risks associated with the extent of recovery include- worsening of financial sector stress, slowdown in vaccination, higher inflation constraining monetary-policy support etc.
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