The World Bank expects India’s economy to contract 9.6 per cent in the current fiscal and to rebound to a 5.4 per cent growth in 2021-22 assuming that Covid-related restrictions will be completely lifted by 2022. A weak global scenario and a tough domestic environment mean both Indian imports and exports will be affected this year.

India needs to continue with critical reforms to reverse the sudden and steep impacts of Covid-19 on its economy, the World Bank said in its twice-a-year-regional update.

Millions of people in South Asia are being pushed into extreme poverty as the region, where a quarter of humanity lives, suffers its worst-ever recession, the World Bank said.

The latest South Asia Economic Focus forecasts a sharper-than-expected economic slump across the region, with regional growth expected to contract 7.7 percent in 2020, after topping 6 per cent annually in the past five years. Regional growth is likely to rebound to 4.5 per cent in 2021.

“Covid-19 will profoundly transform South Asia and leave lasting scars. But there is a silver lining toward resilient recovery— it could spur innovations that improve South Asia’s future participation in global value chains,” said Hans Timmer, World Bank chief economist for the South Asia Region.