New Delhi: In its recent prediction, the World Bank has said that India's Gross Domestic Product (GDP) is expected to further contract by 9.6 per cent this fiscal, which is much steeper that the 3.2 per cent shrinkage projected earlier. The massive dip is country's economy comes in the backdrop of the nationwide lockdown induced due to Coronavirus outbreak. ALSO READ | Restore Your Lost Savings Due To Pandemic; Here’s What You Should Do

The Washington-based global lender also said that country’s economic situation is “much worse” than ever seen before.

In its latest South Asia Economic Focus report, the World Bank predicted a sharper than expected economic slump across the region, with regional growth expected to contract by 7.7 per cent in 2020, after topping six per cent annually in the past five years.

“India’s GDP is expected to contract by 9.6 per cent in the fiscal year that started in March,” the World Bank said in the report adding that regional growth is projected to rebound to 4.5 per cent in 2021.

The report further stated that factoring in population growth, income-per-capita in the region will remain 6 per cent below 2019 estimates, indicating that the expected rebound will not offset the lasting economic damage caused by Covid-19 pandemic.

There was a 25 per cent decline in GDP in the second quarter of the year, which is the first quarter of the current fiscal year in India.

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In its report, the World Bank also said that the spread of the coronavirus and containment measures have severely disrupted supply and demand conditions in India.

In order to contain the spread of deadly outbreak of novel Coronavirus, the Central government announced a nationwide lockdown in the country from March 25 that brought as much as 70 per cent of economic activity, investment, exports and discretionary consumption to a standstill.

According to the World Bank, monetary policy has been deployed aggressively and fiscal resources have been channeled to public health and social protection, but additional counter-cyclical measures will be needed, within a revised medium-term fiscal framework.

Owing to the nationwide lockdown, Indian economy contracted a record 23.9% in the June quarter. Faced with an unprecedented downturn, India needs to continue with critical reforms to reverse the sudden and steep impacts of Covid-19 pandemic on its economy, World Bank said.

The country's growth is projected to rebound to 5.4 per cent in FY22, mostly reflecting base effects, assuming Covid-related restrictions are completely lifted by 2022. Weak activity, domestically and abroad, is also likely to depress both Indian imports and exports.