The World Bank on Thursday said that India's economy is expected to contract by 9.6 percent in the current fiscal year (2020-21) due to the Covid-19 pandemic.
According to its twice-a-year regional update, south Asia is set to dive into its worst-ever recession as the devastating impacts of Covid-19 on the region's economy lingers on, taking a disproportionate toll on informal workers and pushing millions of south Asians into extreme poverty.
The report titled "Beaten or Broken? Informality and Covid-19" forecasts a sharper than expected economic slump across the region with regional growth expected to decrease by 7.7 percent in 2020 after topping 6 percent annually in the past five years.
Regional growth in 2021 in projected to rebound to 4.5 percent.
"The collapse of south Asian economies during Covid-19 has been more brutal than anticipated, worst of all for small businesses and informal workers who suffer sudden job losses and vanishing wages," said Hartwig Schafer, World Bank Vice President for south Asian region.
"Immediate relief has dulled the impacts of the pandemic, but governments need to address the deep-seated vulnerabilities of their informal sectors through smart policies, and allocate their scarce resources wisely," he added.
Factoring in population growth however, income-per-capita in the region will remain 6 percent below 2019 estimates, indicating that the expected rebound will not offset the lasting economic damage caused by the pandemic.
Sharp drops in earnings were experienced by informal workers with rising food prices as Covid-19 gripped the region.
Furthermore, the report urges the governments to design universal social protection as well as policies that support greater productivity, skills development and human capital. Securing international and domestic financing will help governments fund crucial programs to speed up recovery.
