IMF's Gita Gopinath spells out what risks India's growth story

The economist said that access to vaccines — which India had struggled with — would be key for economic recovery

India's economic growth story may be dented further should a third wave of the Covid-19 pandemic result in restricted mobility, according to IMF's Chief Economist Gita Gopinath.

In an interview with NDTV, Gopinath said that following the second wave, which hit India harder than any other country, a third wave during which mobility is limited will put India "at risk of another downgrade."

IMF had in fact on Tuesday downgraded the Indian economy's growth rate for FY22 from 12.5 per cent to 9.5 per cent due to the impact of the second wave in April and May.

For 2022-23, IMF expects economic growth of 8.5 per cent, larger than the 6.9 per cent it had projected in April.

"Growth prospects in India have been downgraded following the severe second Covid wave during March-May and expected slow recovery in confidence from that setback," IMF said in its latest World Economic Outlook (WEO).

Read | IMF cuts India's GDP growth forecast to 9.5% for FY22

India's economy is gradually recovering from a deep contraction in the fiscal year ended March 31, 2021 (7.3 per cent) and a subsequent severe second wave of Covid-19.

Last month, S&P Global Ratings projected a 9.5 per cent GDP growth in the current fiscal and 7.8 per cent in 2022-23.

Mysuru-born Gopinath noted that the pandemic has been "very hard" on a lot of people and estimated that close to 3 crore Indians were living in poverty. She also told the publication that at the current pace of the vaccination drive, only 30 per cent would be fully vaccinated by year-end. The economist said that access to vaccines would be key for economic recovery.

"Faster than expected vaccination rates and return to normalcy have led to upgrades, while lack of access to vaccines and renewed waves of Covid-19 cases in some countries, notably India, have led to downgrades," Gopinath had said, while announcing India's growth forecast on Tuesday.

(With inputs from PTI)