New Delhi: The International Monetary Fund in its latest projections revised India’s economic growth rate to an impressive 12.5 per cent in 2021. The IMF released its Global Economic Outlook report on Tuesday and upgraded its previous projections of 11.5 per cent for India by 1 per cent for FY 2021-22, but cautioned that the projections have not factored in the second wave of coronavirus cases in the country. IMF added that the Indian economy is expected to grow by 6.9 per cent in 2022.
“For the Emerging and Developing Asia regional group, projections for 2021 have been revised up by 0.6 percentage point, reflecting a stronger recovery than initially expected after lockdowns were eased in some large countries (for example, India). However, still high COVID-19 caseloads in some large countries in 2020:Q1 (such as Indonesia and Malaysia) put a lid on growth prospects,” the report said.
The financial institution added that India’s monetary policy projections are consistent with achieving the Reserve Bank of India’s inflation target over the medium term. The IMF calculates India’s real GDP growth rates as per national accounts which treats 2011 as a base year.
India recorded a huge one-day spike of 1,03,558 new COVID-19 cases on April 5, an all-time record in India. On Tuesday, the country reported a slight dip in daily cases on Tuesday with 96,982 new COVID-19 cases. The numbers can erode investor sentiments and affect the growth projections, cautioned IMF.
In 2020, the Indian economy contracted a record eight per cent, while it was fighting the Coronavirus pandemic and imposed a nationwide lockdown to stem the rise in numbers.
Meanwhile, China, the only country in the world which grew by 2.3 per cent in 2020, is expected to grow 8.6 per cent in 2021 and 5.6 per cent in 2022.
The global economic growth is expected to moderate to 3.3 per cent in the medium term, reflecting projected damage to supply potential and forces that predate the pandemic, including aging-related slower labour force growth in advanced economies and some emerging market economies.