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MF Downgrades India’s Growth Projection From 12.5% To 9.5% For 2021-22

IMF pegged India’s economic growth at 9.5 per cent for the current fiscal year, in line with the growth forecast made by the RBI during the June monetary policy committee meet.

The International Monetary Fund (IMF) lowered India’s growth projection from 12.5 per cent to 9.5 per cent for fiscal 2021-22 - down by three percentage points, following the severe second wave of COVID-19 pandemic in the country. For the current fiscal year, India witnessed the largest drop in growth projections made by IMF, even as the global economic growth rate remains the same at six per cent.

However, for the next fiscal 2022-23, IMF revised the economic growth for India up from 6.9 per cent to 8.5 per cent it had projected in April 2021 - higher by 1.6 percentage points.

"Growth prospects in India have been downgraded following the severe second COVID wave during March-May and expected slow recovery in confidence from that setback," IMF said in its latest World Economic Outlook (WEO).

In its second bi-monthly monetary policy committee meeting for fiscal 2021-22 held on June 4, the Reserve Bank of India (RBI) also lowered the country’s gross domestic product (GDP) projection to 9.5 per cent, from 10.5 per cent.

Among the developing nations, IMF has downgraded the economic growth projections for India at three per cent, for China at 0.3 per cent, and for Saudi Arabia at 0.5 per cent. While the change in economic growth projections made by IMF for the rest of the developing countries including Mexico, Brazil, South Africa, among others, is in positive terms.

Along with IMF, several global and domestic agencies have cut India’s growth estimates for the current fiscal. Last month, S&P Global Ratings also projected a 9.5 per cent GDP growth in 2021-22 for India and 7.8 per cent in 2022-23. The World Bank has pegged the growth at 8.3 percent from April 2021 to March 2022. Additionally, the Asian Development Bank (ADB) also downgraded India’s economic growth projection to 10 per cent from 11 per cent estimated in April 2021.

Recording its worst-ever performance in more than four decades, India registered a de-growth of 7.3 per cent for the fiscal year 2020-21, while the preceding January-March quarter of the fiscal showed a slight rise of 1.6 per cent. The economy snapped out of technical recession in the third quarter of the previous fiscal, after two consecutive quarters of de-growth. In the first quarter of the previous fiscal, the GDP contracted by a record 23.9 per cent as an impact of the first pandemic-led nationwide lockdown. 

India reported 29,689 new COVID-19 cases and 415 deaths in the past 24 hours - the first time in 132 days that daily cases dipped below 30,000, according to Health Ministry’s data on Tuesday, July 27. The weekly positivity rate stands at 2.33 per cent and the daily rate is 1.73 per cent. So far, 44.19 crore vaccine doses have been administered in the country.