The International Monetary Fund (IMF) on Tuesday cut its economic growth forecast for India to 9.5% for the fiscal year to March 31, 2022 as the onset of a severe second COVID-19 wave cut into recovery momentum.
This forecast for 2021-22 is lower than the 12.5% growth in GDP that IMF had projected in April before the second wave took a grip.
For 2022-23, IMF expects economic growth of 8.5%, larger than the 6.9% it had projected in April .
"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).
India's economy is gradually recovering from a deep contraction in the fiscal year ended March 31, 2021 (7.3%) and a subsequent severe second wave of COVID-19.
IMF joins a host of global and domestic agencies which have cut India's growth estimates for the current fiscal. Last month, S&P Global Ratings projected a 9.5 % GDP growth in the current fiscal and 7.8 % in 2022-23.
While World Bank sees GDP growth at 8.3 % from April 2021 to March 2022, the Asian Development Bank (ADB) last week downgraded India's economic growth forecast to 10 % from 11 % estimated in April.
Another US-based rating agency Moody's has projected India clocking 9.3 % growth in the current fiscal ending March 2022. For 2021 calendar year, Moody's has cut the growth estimate sharply to 9.6 %.
The GDP, which shrank from $2.87 trillion in 2019-20 to $2.66 trillion in the following year, is estimated to reach around $4 trillion in 2024-25.
Overall, the global economy is projected to grow 6 % in 2021 and 4.9 % in 2022. The 2021 global growth forecast is unchanged from the April 2021 WEO, but with offsetting revisions, the report said.
"The global economic recovery continues, but with a widening gap between advanced economies and many emerging markets and developing economies.
"Our latest global growth forecast of 6% for 2021 is unchanged from the previous outlook, but the composition has changed," IMF's Chief Economist Gita Gopinath said in a blog post released along with the WEO.
Ms Gopinath said IMF estimates the pandemic has reduced per capita incomes in advanced economies by 2.8 %, relative to pre-pandemic trends over 2020-2022, compared with an annual per capita loss of 6.3 % a year for emerging market and developing economies (excluding China).
"These revisions reflect important extent differences in pandemic developments as the delta variant takes over. Close to 40% of the population in advanced economies has been fully vaccinated, compared with 11% in emerging market economies, and a tiny fraction in low-income developing countries," she wrote.
"Faster-than expected vaccination rates and return to normalcy have led to upgrades, while lack of access to vaccines and renewed waves of COVID-19 cases in some countries, notably India, have led to downgrades," Ms Gopinath added.