IMF cuts India’s GDP growth forecast to 9.5% for FY22 as second wave hits recovery

The forecast by IMF for the fiscal year 2021-22 is lower than the 12.5% economic growth that the agency had projected in April 2021, before the deadly second wave took a grip.

Created On: Jul 28, 2021 13:37 IST
International Monetary Fund
International Monetary Fund

The International Monetary Fund on July 27, 2021, bought down its GDP growth forecast for India to 9.5% for the fiscal year to March 31, 2022.

The forecast by IMF for the fiscal year 2021-22 is lower than the 12.5% economic growth that the agency had projected in April 2021, before the deadly second wave took a grip.

For the year 2022-23, the International Monetary Fund expects economic growth of 8.5 percent, larger than the 6.5% that it had projected in April 2021.

What led to the cut of India’s growth forecast?

The onset of the severe second wave of the COVID-19 pandemic has cut into the economic recovery momentum of the country.

IMF in its latest World Economic Outlook (WEO) said that the growth prospects in India have been downgraded after the severe second wave of COVID-19 pandemic during March-May 2021 and expected the slow recovery in confidence from that setback.

The country’s economy is moderately recovering from a decline in the financial year ended on March 31, 2021 (7.3%) and a severe second wave of Coronavirus pandemic.

Other global and domestic agencies on India’s growth

The International Monetary Fund has joined a host of domestic and global agencies which have cut the growth estimates of India for the current fiscal.

S&P Global Ratings-

In June 2021, S&P Global Ratings had projected a 9.5% of GDP growth in the current fiscal and 7.8% in 2022-23.

World Bank-

World Bank sees India’s Gross Domestic Product to grow at 8.3% from April 2021 to March 2022.

Asian Development Bank-

Last week, the Asian Development Bank (ADB) downgraded India’s economic growth forecast to 10% from 11% which was estimated in April 2021.


The US-based rating agency had projected India’s economic growth to be 9.3% in the current fiscal ending in March 2022. Moody’s for the 2021 Calendar year has cut the growth estimate sharply to 9.6%.

Global economy projection by IMF:

As per the IMF report, the global economy overall is projected to grow at 6% in the year 2021 and 4.9% in 2022. The 2021 global forecast is unchanged from April 2021 World Economic Outlook, but with the offsetting revisions.

IMF’s Chief Economist, Gita Gopinath said that the global economic recovery continues, but along with a widening gap between the advanced economies and many emerging markets and developing economies.

Increasing difference between advance and developing economies:

Gita Gopinath stated that IMF’s latest global growth forecast of 6% for the year 2021 is unchanged from the previous outlook, however, the composition has changed.

The multilateral agency estimates that the covid pandemic has reduced per capita incomes in the advanced and developed countries by 2.8, compared with an annual per capita loss of 6.3% a year for the developing economies (excluding China) and emerging markets.


The revision shows the differences in the pandemic developments as the delta variant of COVID-19 takes over in various countries.

Around 40 percent of the population in the developed countries has been fully vaccinated, in comparison with the 11% in the emerging economies, and a very tiny fraction in the low-income developing economies.

The Chief Economist adds that the faster-than-expected COVID vaccination and return to normalcy have led to the upgrades, while the lack of vaccines and the recurring waves of COVID in some countries, notably India, have led to further downgrades.


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