The International Monetary Fund (IMF) said the recent surge in COVID-19 cases in India posed downside risks to the Fund’s April forecast for 12.5% ​​growth in Indian economic output over the course of for fiscal years 2021 and 2022.

The IMF will revisit this forecast when it releases a new World Economic Outlook in July, IMF spokesman Gerry Rice told reporters at a regular briefing, but gave no other detail.

He said developments in India, the second most populous country in the world, would have spillover effects for the region and the global economy, depending on the duration of the crisis, but it was too early to give details.

“We all watch what is happening in India with concern,” Rice said. “There will be fallout … depending on how deep and how severe this crisis is.”

India, with a population of 1.3 billion, reported a record 412,262 new COVID-19 cases and a record 3,980 deaths, as a second wave of infections overwhelmed its system. health.

COVID-19 infections in India topped 21 million, with a death toll of 230,168, according to data from the Ministry of Health.

Medical experts say India’s actual figures could be five to ten times higher than the official figures.

Meanwhile, India has asked state-owned banks to withdraw funds from their foreign currency accounts, two government officials and a banker said, as New Delhi fears Cairn Energy will attempt to seize the money afterwards. an arbitration decision in a tax dispute.

Cairn was awarded over $ 1.2 billion in damages plus interest and fees in December as part of a protracted battle with the Indian government over its retrospective tax claims.

As New Delhi filed an appeal, the London-listed company began to identify Indian assets abroad, including bank accounts, which could be foreclosed in the absence of a settlement, which Cairn says is suing. .

The company has filed its lawsuit against India in courts in the United States, Britain, France, the Netherlands, Singapore and Quebec, measures that could facilitate asset seizure and enforcement. of the arbitration award.

“Earlier this week, instructions were sent to state-owned banks to withdraw funds from their nostro accounts,” one of the government officials, who asked not to be named, told Reuters, adding that the ministry of Finances had issued the instructions. A nostro account refers to an account that a bank holds abroad with another bank in the currency of that jurisdiction. These accounts are used for international trade and to settle other foreign exchange transactions.

The finance ministry did not immediately respond to requests for comment.

A banker at one of India’s 12 state-owned banks, who also asked not to be identified, confirmed that the ministry sent the guidelines and said the government was concerned that foreign courts could order the funds to their jurisdiction be returned to Cairn.

“There was a fear that some courts could take a drastic step saying that whatever the Indian government’s offshore funds, these could be taken back or frozen for the time being,” the banker told Reuters. “Our assets are equivalent to the assets of the Indian government because we belong to them.”

The Association of Indian Banks, an industry body representing lenders, did not immediately respond to a request for comment. At least two state-owned banks also did not respond, while others could not be reached outside of regular business hours.

Cairn said in February he was discussing several proposals with the government to find a solution.

“Cairn continues to have constructive engagement with the Indian government,” said a company spokesperson when asked about the case on Thursday. But the second Indian government official said talks between New Delhi and Cairn were making little progress and the ministry’s request to the banks showed the government fears the British company could move quickly to seize assets.

The dispute began after a previous Indian government decided to retrospectively impose a capital gains tax on certain companies, such as Cairn and telecommunications operator Vodafone Plc, which also took the case to arbitration. and won.

The cases scared foreign investors and dealt a heavy blow to the government of Manmohan Singh, which lost power in the 2014 elections for Prime Minister Narendra Modi.

Modi’s government has said it will not make retrospective tax claims in the future, but it has defended outstanding cases.

A leading Indian industry body has urged authorities to take the ‘strongest national measures’ and cut economic activity to save lives as the country battles the surge in coronavirus cases that have overwhelmed the health system.

The rate of new infections declined slightly, but deaths continued to rise. Authorities reported 392,488 new cases in the past 24 hours, bringing the total number of cases to 19.56 million. Deaths jumped from a record 3,689, bringing the overall toll to 215,542.