New Delhi, first published 20 April 2022, 5:34 PM IST
Despite global setbacks due to impending war fears between Russia and Ukraine, India will remain the fastest growing economy in the world, leaving major advanced and emerging economies behind.
The International Monetary Fund, headquartered in Washington, has forecast India to grow 8.2% in 2022-23 and 6.9% in the next fiscal year.
Read also: War in Ukraine: Russian economy will contract by 8.5% for 2022: IMF
According to experts, some things worked in India’s favor despite high cost.
Economic expert Prakash Chawla said: “Under a scenario where the IMF has forecast global economic growth of 3.6%, India’s position as the fastest growing economy in the world with an expansion We should like a likely 8.2% in 2022. A few things are working, at the moment, in India’s favor despite the high cost of the Ukraine-Russia war inflicted on countries dependent on energy imports.
India has achieved some success with its immunization program with cumulative coverage of 187 million doses, providing immunity to an overwhelming majority of our population. Along with natural immunity, our economic activities – led by a predominantly service sector – have returned to normal.
Contact services like hotels, road, rail and air transport rebounded, with popular mountain resorts reporting full bookings during the summer season.
Agriculture, although affected by increased input costs, is harvesting a bumper Rabi crop and is expected to receive a normal monsoon. Agricultural exports, dominated by wheat and sugar, have been boosted by global shortages of food grains caused by the war between Ukraine and Russia.
According to Chawla, the manufacturing industry is still grappling with several challenges, including rising raw material costs, supply chain disruptions and the return of interest rates to the normal path after a long period of slowdown. .
China’s economy, which used to grow at roughly the same pace as India’s, is lagging far behind this time. The international financial institution has forecast Chinese growth of 4.4% in 2022-23 and 5.1% in 2023-24.
Before Russia’s invasion of Ukraine in January, the IMF said India would grow by 7.1% in 2023-24, but this time it cut growth to 6.9% to the same period, while the Reserve Bank of India estimated an expansion of 6.3 percent.
In its latest World Economic Outlook Growth Projections report, the IMF predicted that the global economy would grow by 3.6% in 2022-23 and 2023-24 as well.
According to the IMF estimate, the advanced economies which include the United States, European nations, the United Kingdom, Japan and Canada, would grow by 3.3%, or 30 basis points less than the growth of world economies.
The economies of the United States, France, Germany, United Kingdom, Japan and Canada would show growth of 3.7, 2.9, 2.1, 3.7, 2.4 and 3.9%, respectively. Among economies, the IMF said Russia had the biggest drop in growth estimates, contracting to 8.5% in 2022 from 2.8% growth forecast in January.
The Russian economy is expected to contract further in 2023, by 2.3%.
However, the economic expert also added a sound of caution. He said that even though the IMF projections look flattering, India needs to be very careful about the threat of Covid 19.
“We cannot afford and allow another wave of the pandemic. This is only possible if we continue to accelerate the speed and coverage of vaccination and return to Covid protocols, at least wearing masks. L “At stake is our highly employment-focused service sector which appears to be leading the engines of growth, also driven by agriculture and government spending,” he said.
Regarding the decline in IMF estimates of 0.8 percentage points, this is understandable against the backdrop of global headwinds of war and inflation, he added.
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Last updated April 20, 2022 5:34 PM IST