India will grow 11.5% in fiscal year 2022, and 6.8% in fiscal year 2023, according to latest estimates put out by the International Monetary Fund in the January 2021 update of its World Economic Outlook. The Indian economy is expected to contract 8% in the ongoing financial year: FY21. The fiscal year runs from April to March of the succeeding year.
In calendar year terms, in 2020, the IMF estimates that India has contracted 7.6%, while it will grow 11% in 2021.
These high growth rates would be due to a favourable base effect - since India will contract markedly this year, it will bounce back faster in percentage terms.
India will contract more than the world economy, and some economies around the world due to the fallout caused by the ongoing COVID-19 pandemic. But according to these numbers, India will outpace several other economies in growth over the next two years; and later at a slower pace.
A similar trajectory has been estimated by Fitch Ratings, which can be read below.
The numbers released by the IMF in this edition of the report showcase how economies around the world are limping their way back to normalcy after being wrecked due to the health restrictions they had to impose at various points in 2020 to battle the spread of the coronavirus. The recovery is projected to be uneven, depending on access to medical intervention, international spillovers and policy support.
In 2021, the world economy is estimated to grow 5.5%, up 0.3 percentage points from its forecast in October. Vaccine approvals have raised hopes, but the IMF maintains that uncertainty exists. "Although recent vaccine approvals have raised hopes of a turnaround in the pandemic later this year, renewed waves and new variants of the virus pose concerns for the outlook", its states.
In 2020, the world economy was expected to shrink 4.4%, but the recently released estimates show that it shrank 3.5% - a 0.9 percentage point improvement, reflecting a stronger than expected momentum in the second half of 2020.
In comparison, the economy of the United States will contract a close 3.4%, but will grow 5.1% in 2021. China's economy will be registering growth this year despite the pandemic, and it will spurt 8.1% next year, but it will slow to 5.6% to the year after that.
Notable revision for India
India's FY 22 growth, which is shown to be 11.5%, has been bumped up 2.7 percentage points by the IMF. The Indian economy previously expected to grow at 8.8% in FY22.
Since April 2020, this is the fourth estimate put out by the IMF. In its April WEO, the IMF estimated that India would grow slowly by 1.9%, revised downwards to show a contraction of 4.5% according to the June WEO. In its October WEO, the IMF estimated that India would contract 10.3% in FY21, which has now been revised upwards to 8%.
India is among those economies whose growth in the third quarter of 2020 (second quarter of the ongoing fiscal year) was above expectation - joining economies like the United States, Japan, Australia, the Euro Area, New Zealand and Turkey in reporting better than expected quarterly results.
India's Q1FY21 results were devastating, when it was reported in August that the economy contracted 23.9% from the same period last year. In Q2, whose data was released in November, India contracted 7.5%. While India formally entered a technical recession, the contraction was still better than expected.