GLOBAL ECONOMIC PROSPECTS

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Recently, the World Bank has released its June 2021 Global Economic Prospects where it has forecast India’s GDP growth to be 8.3% for the year 2021-22.

Important points:

• India’s economy is expected to grow at 8.3% for Fiscal Year 2021-22, 7.5% for 2022-23 and 6.5% for 2023-24.
• The world economy is expected to expand 5.6%, the fastest post-recession growth rate in eighty years.
• However, global output will still be 2% below pre-pandemic projections by year-end.
• The projected growth compares to the worst ever contraction of 7.3% in FY 2020-21 and 4% expansion in 2019-20.
• India’s recovery is being hampered by the largest outbreak of any country since the beginning of the pandemic.
• The forecast for FY22 (8.3%) factors in expected economic damage from an enormous second Covid-19 wave and localised mobility restrictions since March 2021.
• Growth is expected to slow to 7.5% as a result of the pandemic’s lingering effects on the financial position of households, companies and banks and possibly low levels of consumer confidence and heightened uncertainty around job and incomes.

Steps Taken by India:

• The Reserve Bank of India (RBI) announced measures to provide liquidity to Micro, Small and Medium firms (MSMEs), and loosened regulatory requirements on the provisioning for non-performing assets.
• Fiscal policy shifted in the FY 2021/22 budget toward higher expenditure targeted at healthcare and infrastructure to boost the post-pandemic recovery.
• Globally coordinated efforts are essential to accelerate vaccine distribution and debt relief, particularly for low-income countries.
• As the health crisis eases, policymakers will need to address the pandemic’s lasting effects and take steps to spur green, resilient, and inclusive growth while safeguarding macroeconomic stability.
• For low-income countries, policies focusing on scaling up social safety net programs, improving logistics and climate resilience of local food supply would be more helpful.

World Bank

• The Bretton Woods Conference held in 1944, created the International Bank for Reconstruction and Development (IBRD) along with the International Monetary Fund (IMF).
• The IBRD later became the World Bank.
• The World Bank Group is a unique global partnership of five institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries.
• It has 189 member countries. India is also a member country.

Global Economic Prospects.

• Its Five Development Institutions:
• International Bank for Reconstruction and Development (IBRD): Provides loans, credits, and grants.
• International Development Association (IDA): Provides low- or no-interest loans to low-income countries.
• International Finance Corporation (IFC): Provides investment, advice, and asset management to companies and governments.
• Multilateral Guarantee Agency (MIGA): Insures lenders and investors against political risk such as war.
• International Centre for the Settlement of Investment Disputes (ICSID): Settles investment-disputes between investors and countries.
• India is not a member of ICSID.

SOURCE: THE HINDU,THE ECONOMIC TIMES ,MINT