Context: The World Bank 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.

Previous forecast:

• The World Bank 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.
• 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.

Reasons:

• 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.

World Bank:

• The World Bank is an international financial institution that provides loans and grants to the governments of poorer countries for the purpose of pursuing capital projects. 
• It comprises two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).
• The World Bank is a component of the World Bank Group.
• Headquarters: Washington, D.C., U.S.

Reference: https://www.thehindu.com/business/Economy/world-bank-may-forecast-steeper-india-contraction/article32397468.ece

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