The International Monetary Fund on Tuesday lowered its economic growth projection for India for the current financial year (2021-’22) by three percentage points from 12.5% to 9.5%.

“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,” the IMF said in its latest World Economic Outlook report.

However, for the next fiscal year (2022-’23), the IMF revised India’s growth projection upwards from 6.9% to 8.5%.

India’s Gross Domestic Product contracted by an unprecedented 7.3% in the previous financial year, 2020-’21, hit by the pandemic and a nationwide lockdown that disrupted economic activities. The government had, on several occasions, expressed confidence of a sharp V-shaped recovery in the economy in this financial year.

However, many economic organisations, including the Reserve Bank of India, have revised their growth projections for India to under 10% in the past couple of months.

On June 4, the Reserve Bank of India revised its estimates for 2021-’22 to 9.5% from the previous forecast of 10.5%. The central bank’s Governor Shaktikanta Das said the sudden rise in Covid-19 infections and fatalities in the second wave of the pandemic in April and May had “impaired the nascent economic recovery” that was underway.

Since then, at least two ratings agencies have made similar predictions. In the last week of June, S&P Global Ratings lowered India’s growth forecast for 2021-2022 to 9.5% from the earlier projected 11%. Moody’s Investors Service has also revised the growth forecast for India to 9.6% from the earlier estimate of 13.9%.

Global banking institutions have also followed a similar trend. The World Bank cut its growth projection to 8.3% from the estimated 10.1% in April. Last week, the Asian Development Bank lowered the growth forecast to 10% from its projection of 11% released in April.