The World Bank on Wednesday indicated that it may further lower its GDP projections for India and said critical reforms in key areas such as health, labour, land, skills and finance were needed to come out stronger from the COVID-19 crisis.The World Bank, had in May, projected that the Indian economy would contract by 3.2% in FY 2020-21 and rebound slowly in the next financial year.‘Further challenges’“Further challenges have emerged in recent weeks which are likely to weigh on the prospects in the near term. These risks include the virus continuing to spread; further deterioration in the global outlook; and additional strains projected on the financial sector,” the bank said in its India Development Update. “Keeping these factors in mind, a steeper contraction may be projected in the revised outlook that will be available in October 2020,” it added.It projected India’s fiscal deficit to rise to 6.6% of GDP in FY21 and remain elevated at 5.5% in the following year.Also, there would be a second round of consumption and investment slowdown, compounded by (and ultimately driving) distress in the financial sector and financial markets, the World Bank said.
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