India to grow over 10 pc in fiscal 2021-22, but growth uneven, says World Bank

The development lender said prospects of an economic rebound in South Asia are firming up as growth is set to increase by 7.2 per cent in 2021 and 4.4 per cent in 2022, climbing from historic lows in 2020 and putting the region on a path to recovery.

Electricity consumption and mobility data is a clear indication of recovering economic activity, the bank said in its report, South Asia Economic Focus: South Asia Vaccinates, that shows that the region is set to regain its historical growth rate by 2022.

But growth is uneven and economic activity well below pre-COVID-19 estimates, as many businesses need to make up for lost revenue and millions of workers, most of them in the informal sector, still reel from job losses, falling incomes, worsening inequalities, and human capital deficits, said the World Bank in its twice-a-year regional update, it said in its twice-a-year regional update.

The bank has also revised the outlook for Bangladesh, Nepal, and Pakistan upward, supported by better than expected remittance inflows.

Bangladesh’s gross domestic product (GDP) is expected to increase by 3.6 per cent in 2021.

Nepal’s GDP is projected to grow by 2.7 per cent in the fiscal year 2021-22 and recover to 5.1 per cent by 2023 while Pakistan’s growth is expected to reach 1.3 per cent in 2021, slightly above previous projections.

The improved economic outlook reflects South Asian countries’ efforts to keep their COVID-19 caseload under control and swiftly roll out vaccine campaigns.

Governments’ decisions to transition from widespread lockdowns to more targeted interventions, accommodating monetary policies and fiscal stimuli—through targeted cash transfers and employment compensation programs—have also propped up recovery, the report notes.

"We are encouraged to see clear signs of an economic rebound in South Asia, but the pandemic is not yet under control and the recovery remains fragile, calling for vigilance," said Hartwign Schafer, World Bank vice president for South Asia."Going forward, South Asian countries need to ramp up their vaccination programmes and invest their scarce resources wisely to set a foundation for a more inclusive and resilient future."

While laying bare South Asia’s deep-seated inequalities and vulnerabilities, the pandemic provides an opportunity to chart a path toward a more equitable and robust recovery. To that end, the report recommends that governments develop universal social insurance to protect informal workers, increase regional cooperation, and lift customs restrictions on key staples to prevent sudden spikes in food prices.

South Asia, which grapples with high stunting rates among children and accounts for more than half of the world’s student dropouts due to COVID-19, needs to ramp up investments in human capital to help new generations grow up healthy and become productive workers.

Noting that South Asia’s public spending on healthcare is the lowest in the world, the report also suggests that countries further invest in preventive care, finance health research, and scale up their health infrastructure, including for mass and quick production of vaccines.

"South Asia has stepped up to vaccinate its people, but its healthcare capacity is limited as the region only spends 2 percent of its GDP on healthcare, lagging any other region. The main challenge ahead is to reprioritize limited resources and mobilize more revenue to reach the entire population and achieve full recovery," said Hans Timmer, World Bank chief economist for the region.