New Delhi: The Asian Development Bank (ADB) downgraded India’s economic growth forecast for the current financial year to 10 per cent Tuesday. Earlier in the year the ADB had projected the growth as 11 per cent. However, the ADB has now decreased the growth rate because of the account of the adverse impact of the coronavirus pandemic.
India’s GDP growth recovered to 1.6 per cent in the last quarter of fiscal year ended March 2021. This growth narrowed contraction in the whole fiscal year from eight per cent estimated in April to a revised 7.3 per cent, the multilateral funding agency said in the Asian Development Outlook (ADO) Supplement.
“Then a second wave of the pandemic induced many state governments to impose strict containment measures. New Covid-19 cases daily peaked at more than 4,00,000 in early May, then fell to a little over 40,000 in early July, the ADB said.
“Early indicators show economic activity resuming quickly after containment measures eased. The growth projection for FY2021 (ending March 2022), downgraded from 11 per cent in ADO 2021 to 10 per cent, reflects large base effects,” it said. The ADO was released in April.
Meanwhile, the inflation forecast for Asia and the Pacific this year has been raised to 2.4 per cent, from 2.3 per cent in April, reflecting rising oil and commodity prices. The projection for 2022 remains at 2.7 per cent, it added.
For South Asia, the inflation forecast has been raised for 2021 to 5.8 per cent from 5.5 per cent, mainly reflecting a higher forecast for India. However, it has been kept unchanged at 5.1 per cent for 2022.
Meanwhile, growth projection for FY2022 (ending in March 2023), by which time much of India’s population is expected to be vaccinated, is upgraded from seven per cent to 7.5 per cent as economic activity normalises, said the Manila-headquartered funding agency.
With regard to China, the ADB supplement said the expansion in the People’s Republic of China is still projected at 8.1 per cent in 2021, and 5.5 per cent in 2022, as favourable domestic and external trends align with April forecasts.