COVID-19 causes severe disruption to Indian economy, says World Bank
Washington: The World Bank on Sunday said the coronavirus outbreak has severely disrupted the Indian economy, magnifying pre-existing risks to its outlook.
In its South Asia Economic Update: Impact of COVID-19 , the World Bank estimated the Indian economy to decelerate to 5 per cent in 2020 and projected a sharp growth deceleration in fiscal 2021 to 2.8 per cent in a baseline scenario.
The COVID-19 outbreak came at a time when India's economy was already slowing, due to persistent financial sector weaknesses, the report said.
To contain it, the government imposed a lockdown' with restrictions on mobility of goods and people.
The resulting domestic supply and demand disruptions (on the back of weak external demand) are expected to result in a sharp growth deceleration in FY21 to 2.8 percent in a baseline scenario (an estimate subject to wide confidence intervals), the report said, adding that the services sector will be particularly impacted.
A revival in domestic investment is likely to be delayed given enhanced risk aversion on a global scale, and renewed concerns about financial sector resilience.
Growth is expected to rebound to 5.0 per cent in fiscal 2022 as the impact of COVID-19 dissipates, and fiscal and monetary policy support pays off with a lag, the report said.
In a conference call with reporters, World Bank Chief Economist for South Asia Hans Timmer said India's outlook is not good.
And if the domestic lockdown is prolonged, then the economic result can be much worse than what the World Bank has in its baseline range of forecasts.
Among the steps that India can take to address this challenge, Timmer said the first step is to focus on mitigating the spread of the disease, and to make sure that everybody has food.
Then, it is very important to prepare for a rebound and that means there should be a focus on temporary jobs programmes, especially at the local levels. Those initiatives should be supported. And it is important to prevent bankruptcies especially of a small and medium sized enterprise, Timmer said in response to a question.
In the longer run, this is really an opportunity to bring the Indian economy on sustainable path not just fiscally, but also socially, he said.
The World Bank is working with India to mitigate the challenge posed by COVID-19. It has approved USD1 billion to India, of which the first tanche has already been released to deal with the emergency in the health care sector.
The first tranche aims at delivering civilian diagnostic equipment, put in place additional capacity to deal with testing and make testing available that benefits the entire population, said World Bank Vice President for South Asia Hartwig Schafer.
The World Bank is also working with India on two additional operations, which is anticipated to be ready in a matter of weeks.
These include, employment, banking and micro, small and medium enterprise sector. In its report, the World Bank said that the COVID-19 outbreak has magnified pre-existing risks to India's economic outlook.
The government is undertaking measures to contain the health and economic fallout, and the RBI has begun providing calibrated support in the form of policy rate cuts and regulatory forbearance.
Given significant uncertainties, there is a wide confidence interval around the baseline estimate. If a large-scale domestic contagion scenario is avoided, early policy measures payoff, and restrictions to the mobility of goods and people can be lifted swiftly, an upside scenario could materialize in FY21, with growth around four per cent, it said.
However, if domestic contagion is not contained, and the nationwide shutdown is extended, growth projections could be revised downwards to 1.5 per cent, and fiscal slippages would be larger, the World bank said.
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Putin meets Iran's FM Araghchi, says Russia ready to do its best to help bring peace to West Asia
Moscow (PTI): Iran's Foreign Minister Abbas Araghchi on Monday met Russian President Vladimir Putin, who hailed the Iranian people for fighting bravely and heroically for their sovereignty and said Moscow is ready to do its best to help bring peace to West Asia as soon as possible.
Araghchi, who held talks with Omani and Pakistani leadership before arriving in Russia, met Putin in St. Petersburg and thanked him for supporting Iran, state-owned TASS news agency reported.
"Russia is ready to do everything in its power to ensure that peace in the Middle East is achieved as soon as possible," Putin said during his meeting with Araghchi, which was also attended by Russian Foreign Minister Sergey Lavrov.
Revealing that he received a message from Iranian Supreme Leader Mojtaba Khamenei last week, Putin asked Araghchi to convey his "gratitude for this message and best wishes for his health and well-being."
He praised the Iranian people for fighting "bravely and heroically" for their sovereignty, Iran's state-run PRESS TV reported.
"We really hope that, based on the courage and desire for independence, the Iranian people, under the guidance of the new leader, will weather this difficult period of trials and peace will come,” Putin said.
He also stressed that Russia “intends to maintain” its strategic relations with Iran.
Araghchi said that the world witnessed Iran’s strength in countering the US during the recent war, and that the Islamic Republic is a "stable and powerful establishment."
"With their courage, the Iranian people succeeded in resisting the US aggression and will be able to endure it,” he said.
He said that it became clear that Iran has “great friends and allies” like Russia, and conveyed “warmest greetings” from Supreme Leader Mojtaba Khamenei and President Masoud Pezeshkian to the Russian leader.
Araghchi said relations between Moscow and Tehran represent a “strategic partnership at the highest level” and will continue to develop "regardless of circumstances."
"We are grateful to you for the solid and strong positions in support of the Islamic Republic of Iran," he said.
Foreign Minister Lavrov said that the talks between President Putin and the Iranian Foreign Minister were "useful and constructive."
Kremlin Spokesman Dmitry Peskov later said that Russia is "ready to provide any good offices, any mediation services that are acceptable to the parties."
"We will be ready to do everything so that ultimately peace ensues, guaranteed peace, and that there is no return to hostilities," Peskov was quoted as saying by TASS.
He was asked how Moscow can assist in future negotiations on the Iranian settlement.
Araghchi arrived in Russia after his whirlwind trip to Islamabad, which, according to him, was “very productive” and involved “good consultations" with Pakistan's Army Chief Field Marshal Asim Munir, amid uncertainty over the second round of peace talks to resolve the war in West Asia.
"We held good consultations with our friends in Pakistan. The trip was successful. We assessed the outcome of our recent (meetings) and discussed in what direction and under what conditions talks can move on,” Araghchi said in a video posted on his Telegram channel upon his arrival in St Petersburg.
Referring to the second round of talks between the US and Iran to resolve the conflict in West Asia, Araghchi said: "Developments have taken place in the negotiations."
"Despite some progress in earlier rounds, the talks failed to reach their objectives due to the Americans' approach, the excessive demands they made, and the wrong approaches they adopted. Therefore, it was necessary to consult with our friends in Pakistan to review the latest situation,” Iran's official news agency IRNA quoted him as saying.
He said that the trip to Pakistan was a good opportunity to review developments related to the US-Israeli war against Iran, expressing confidence that “these consultations and coordination between the two countries will be highly significant.”
Araghchi arrived at St. Petersburg's Pulkovo Airport early Monday, where he was welcomed by Russian officials and Iran’s ambassador to Russia, Kazem Jalali, the report said.
The first round of peace talks between Iran and the US, held on April 11 and 12, failed to bring the desired result for the parties to the conflict.
The Iranian minister arrived in Islamabad for the second time on Sunday after a short visit to Oman, where he held talks with Sultan Haitham bin Tariq al-Said on security in the Strait of Hormuz and diplomatic efforts to end the Iran-US conflict.
After Araghchi left Pakistan for Oman on Saturday, President Donald Trump announced that US negotiators Steve Witkoff and Jared Kushner would no longer be going to Islamabad for talks with Iran, contending that Washington held all the cards on the matter.
Trump on Sunday reiterated that the US and Iranian officials can talk by phone for a peace solution to the conflict.
On Tuesday, Trump extended the two-week ceasefire with Iran indefinitely to give Tehran more time to prepare a unified proposal to end the war, just hours before the truce was set to expire.
The war began when the US and Israel jointly attacked Iran on February 28, killing Iranian Supreme Leader Ayatollah Ali Khamenei and several top commanders. The retaliation by the Islamic Republic extended the war to the entire Gulf region.
