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The World Bank in its latest report South Asia Economic Focus titled ‘Shifting Gears: Digitization and Services-Led Development’ has said that India’s economy is expected to grow by 8.3 per cent in the fiscal year 2021-22, buoyed by an increase in public investment and incentives to boost manufacturing, though it is less than the previous projection early this year before the country was hit by the second wave of the COVID-19 pandemic. World Bank Chief Economist for the South Asia Region Hans Timmer said that when one looks at the high frequency data, they see that as a result of the second wave of the COVID-19 pandemic, the recovery paused, and some indicate that the recovery actually declined briefly.

He said ‘we project for this fiscal year 8.3 per cent (growth rate for Indian economy) that is less than we projected early in the year before the health crisis caused by the second wave.’ He added ‘Given the sharp contraction of the economy last year, it might not look like a lot, but in my view, that is actually very positive news, given the violent second wave and the severity of the health crisis’. According to Timmer, what is remarkable and what is the positive part of that number is that the pause was short lived, and the hit on the economy was by far enough, not even comparable as large as a year earlier. He noted ‘That’s how we ended up with 8.3 per cent growth’.

Timmer said that mitigated some of the impacts on the vulnerable parts of India. It is time now to shift gears and to start focusing on medium-term growth, and added that India has already done some reforms during the crisis that go in that direction. Observing that labour reforms and agricultural reforms are still debated at the moment, he said that they are going in a direction that the Bank thinks is necessary. He said it is opening up parts of the economy, where there was unutilised potential. Timmer said that he is especially very interested in the labour reforms that attempt to create funds to set up social protection systems, not just for the people in the formal sector, but also for informal workers and for migrant workers.

One of the main focuses of the latest World Bank report is to unleash the potential of the services sector where it is possible to make services the driver of development in India, and there is still an unfinished agenda, because the current formal services sector is still very regulated, and very protected to international competition. Meanwhile, the report projects the South Asia region to grow by 7.1 per cent in 2021 and 2022.