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World Bank: Indian economy to contract 9.6 pc in FY21 due to COVID-19
India's economy, the largest in south Asia, is expected to contract by 9.6 per cent in the current fiscal year (2020-21) because of Covid-19 pandemic, the World Bank said on Thursday.
Washington DC: India's economy, the largest in south Asia, is expected to contract by 9.6 per cent in the current fiscal year (2020-21) because of Covid-19 pandemic, the World Bank said on Thursday.
At the same time, south Asia is set to plunge into its worst-ever recession as the devastating impacts of Covid-19 on the region's economies linger on, taking a disproportionate toll on informal workers and pushing millions of south Asians into extreme poverty, it said in its twice-a-year-regional update.
The report titled 'Beaten or Broken? Informality and Covid-19' forecasts a sharper than expected economic slump across the region with regional growth expected to contract by 7.7 per cent in 2020 after topping 6 per cent annually in the past five years.
Regional growth is projected to rebound to 4.5 per cent in 2021. Factoring in population growth, however, income-per-capita in the region will remain 6 per cent below 2019 estimates, indicating that the expected rebound will not offset the lasting economic damage caused by the pandemic.
In previous recessions, falling investment and exports led the downturn. This time is different as private consumption -- traditionally the backbone of demand in south Asia and a core indicator of economic welfare -- will decline by more than 10 per cent, further spiking poverty rates.
A decline in remittances is also expected to accelerate loss of livelihoods for the poorest in some countries.
"The collapse of south Asian economies during Covid-19 has been more brutal than anticipated, worst of all for small businesses and informal workers who suffer sudden job losses and vanishing wages," said Hartwig Schafer, World Bank Vice President for the south Asia region. "Immediate relief has dulled the impacts of the pandemic, but governments need to address the deep-seated vulnerabilities of their informal sectors through smart policies, and allocate their scarce resources wisely."
Three-quarters of all workers in south Asia depend on informal employment -- especially in hospitality, retail trade and transport -- sectors most affected by containment measures.(ANI)