Asia Development Bank downgrades India’s economic growth projection to 10% for 2021-22 fiscal year
In the report, the ADB further said that the economic projection for the financial year 2022 has been upgraded to 7.5% from the previous 7%.
The Asian Development Bank (ADB) on Tuesday downgraded India’s economic growth projection for the 2021-22 fiscal year to 10% from the 11% projected in April this year. The projections were made on the Asian Development Outlook report released for July.
In the report, the ADB further said that the economic projection for the financial year 2022 has been upgraded to 7.5% from the previous 7%. “The projection for FY 2022, by which time much of India’s population is expected to be vaccinated, is upgraded from 7.0% to 7.5% as economic activity normalizes,” the report showed.
According to the ADB report, the country’s GDP growth recovered to 1.6% during the last quarter of the 2020 fiscal year, which narrowed the contraction to 7.3% while it was expected to be at 8%. “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 400,000 in early May, then fell to a little over 40,000 in early July,” the report showed. It also said that the early indicators showed economic activity to resume quickly once the restrictions measures in place are eased.
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As far as inflation outlook is concerned, ADB said that it raised India’s inflation forecast by 0.3% for the current year while it remained unchanged for FY 2022. “This Supplement raises the inflation forecast for India in FY2021 by 0.3 percentage points to 5.5% while keeping the forecast for FY2022 at 4.8%,” the report said.
Meanwhile, the GDP growth forecast for the whole sub region of South Asia has been downgraded in the ADB report to 8.9% from the 9.5% projected in the previous report. However, as is the case with India, the projections have been upgraded to 7% for 2022 from the previous 6.6%.
“The economic outlook for South Asia is dampened by new waves of COVID-19 hitting the subregion from March to June 2021. The adverse economic impact of these new waves is expected to be limited, with businesses and consumers better able to adapt to the pandemic and containment measures now than they were a year ago,” the report said.
ADB said that while recoveries continued to gain momentum in “developing Asia,” recent Covid-19 outbreaks, driven in part by the advent of new variants, dragged the growth in several economies. Developing Asia refers to 46 members of the ADB. The GDP growth projection for the current year has been slightly revised down from 7.3% in April 2021 to 7.2% currently. The projection for 2022 is also slightly upgraded from 5.3% to 5.4%, the report said.
