The International Monetary Fund (IMF) projects India to be the fastest-growing major economy this year in a world plunged into a recession by the coronavirus pandemic, despite drastically slashing its growth rate to a paltry 1.9 percent. The World Economic Outlook (WEO) report released on Tuesday by Chief Economist Gita Gopinath expects India to rebound in the next fiscal year with a growth rate of 7.4 percent, more than the projected 6.5 percent in the January update.

The WEO presents a dark picture of the world with the global economy shrinking by 3 percent this year.

It said, “It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago. The Great Lockdown, as one might call it, is projected to shrink global growth dramatically.”

It also carried the caveat: “There is extreme uncertainty around the global growth forecast. The economic fallout depends on factors that interact in ways that are hard to predict.”

India and China, with a projected growth rate of 1.2 percent, stand out with their pluses in a sea of minuses on the WEO chart of growth projections.The developed economies, projected shrink by 6.9 percent, bear the brunt of the downturn.

The US economy is to shrink by 5.9 percent and the Euro area by 7.5 percent, according to the WEO.

The report cut India's growth rate for the last fiscal year to 4.2 percent from the 6.1 percent projected in last October's WEO and 4.8 percent in the January update. Even that is one of the best performances among large economies, exceeded only by China with 6.1 percent and the ASEAN zone with 4.8 percent.

In October it had expected the nation's economy to grow this fiscal year by 7 percent, and in January it had cut it to 5.8 percent.

The WEO is the IMF's flagship report and is released at its Spring and Fall meetings.

The Spring meeting is being held this year in a virtual mode because of the social distancing required to prevent the spread of the COVID-19 pandemic and the travel restrictions.

The IMF released only the first chapter of the WEO and said the full report would be available next month.

The abbreviated report has the projections for only the major economies and does not include its analysis for individual countries or regions.

The report said that the priority should be to contain COVID-19's contagion although these “necessary measures to reduce contagion and protect lives will take a short-term toll on economic activity.”

But they “should also be seen as an important investment in long-term human and economic health,” it added.

The WEO said that “dampening the impact of the shock on the most exposed households and businesses should rely heavily on temporary and targeted policies, including cash transfers, wage subsidies, tax relief, and extension or postponement of debt repayments” and noted that India has announced new food and cooking gas distribution and cash payments to poorer households.

The WEO projects consumer prices in India to increase by 3.3 percent this fiscal year and by 3.6 in the next. The current account balance is projected to fall by 0.6 percent this year and by 1.4 percent next year, according to the report.