Stokes had taken a break from the game in July to focus on his mental wellbeing while also recovering from a finger injury he had suffered during the first leg of the IPL.
"England, they're always a big threat because of the squad they've got and the experience they have. But, for me, India are the favourites," Lee told 'Foxsports.com.au.'
On Friday, the England and Wales Cricket Board said "excellent progress had been made in dealings with Cricket Australia.
The 34-year-old Ali, a spin-bowling all-rounder, announced retirement from the longest format of the game on Monday.
According to ESPN Cricinfo, the England and Wales Cricket Board (ECB) are still adamant and have not thought about postponement which has irked the senior players and support staff.
His absence is a blow to England's chances of adding the 20-over world title to the 50-over world title he helped them win in 2019.
England all-rounder Stokes has taken an indefinite break from all cricket to prioritise his mental wellbeing and to rest his left index finger.
England will open the campaign in the 2021 edition of the tournament against defending champions West Indies at the Abu Dhabi Stadium on October 23.
India bundled out England on 303 in the third session on Day 4 after Joe Root's classy ton in the second innings.
Stokes was originally left out of the squad to focus on his recovery from a finger operation.
The new rest-and-rotate policy in wake of the COVID-19 pandemic has seen many of England's top players being left out of the squad in the last eight Tests.
The England and Wales Cricket Board has made it clear they have a zero-tolerance policy for any sort of discrimination.
ICC match referee Chris Broad imposed the sanction after Joe Root's side was ruled to be two overs short of the target after time allowances were taken into consideration.
Consecutive Test, Twenty20 and One-Day series defeats would be enough for most cricket nations to ring the changes, but not England, according to team stalwart Jos Buttler.
Rashid stated that Morgan knows his game inside out and has been with him through 'good and not so good times'.