By Shakir Husain
NEW DELHI, Oct 8 (NNN-BERNAMA) — India’s economy is expected to shrink by 9.6 per cent in its current financial year due to the coronavirus pandemic, the World Bank said.
The forecast reflects the impact from the national lockdown to contain the COVID-19 spread and the ensuing income shock experienced by households and businesses.
Although India has relaxed most restrictions on economic activities and public movements, the World Bank in its latest South Asia study, sees “substantial uncertainty” related to the course and duration of the pandemic as well as how fast Indian households and companies will adjust to the lifting of lockdowns.
The Indian economy is expected to rebound to 5.4 per cent growth in the financial year 2021-22, it said.
The World Bank said the pandemic-triggered slump will increase non-performing bank loans, and weak activity both domestically and abroad will depress both imports and exports.
“Policy interventions have preserved the normal functioning of financial markets thus far. However, the demand slowdown could lead to rising loan delinquencies and risk aversion,” it said.
On the pandemic’s impact across South Asia, the World Bank painted a gloomy picture.
“The economic disruption is even visible from space: South Asia has darkened since March.
“Between March and August, nighttime light intensity declined in more than three-quarters of South Asia’s districts,” it said.
The World Bank also raised questions about the effectiveness of shutdowns in tackling COVID-19 in the region.
“It is not clear whether lockdowns can effectively mitigate a pandemic in countries with a large share of urban poor and densely populated cities,” the study noted.
— NNN-BERNAMA