ADB trims India’s FY22 growth forecast to 10% on second wave impact

23/09/2021

new delhi, sep 22: The Asian Development Bank (ADB) has cut India’s growth projection for financial year 2021-22 to 10 per cent from 11 per cent earlier taking into account the adverse impact on services, domestic consumption, and the urban informal sector due to the second wave of Covid-19 pandemic.
The downward revision in growth forecast has been a result of India’s economic recovery getting impacted due to spike in Covid-19 cases in May, the agency said in its Asian Development Outlook (ADO) 2021 report.
However, the outbreak dissipated faster than anticipated with several states easing lockdown measures, it said.
“The economy is expected to rebound strongly in the remaining three quarters of FY2021 (April 2021-March 2022), and grow by 10 per cent in the full fiscal year before moderating to 7.5 per cent in FY2022 (April 2022-March 2023).
Because consumption will recover only gradually, government spending and exports will contribute more to FY2021’s growth than they did in the previous fiscal year,” the multilateral agency said.
The economic rebound in the last three quarters of the current financial year is estimated based on improvements in electronic waybills, mobility data, and the purchasing managers’ index.
Private consumption and investment are projected to remain weak due to the pandemic’s impact on household incomes, spending capacity, and lending.
However, the government’s plan to monetise assets through its National Monetization Pipeline (NMP) is expected to drive public investment to boost infrastructure development, the report said.
“Growth in the agriculture sector will remain resilient, yet marginally lower with the pandemic’s spread into rural areas and a delayed monsoon,” the report by ADB said. In its previous outlook, released in April, ADB had projected India’s growth at 11 per cent for the ongoing financial year. For the next financial year it had estimated the Indian economy’s growth at 7 per cent.
The agency said its current projection assumes that the impact of a potential third wave of the Covid-19 pandemic would be limited as the vaccination drive is progressing on schedule, and better preparedness of households and firms.
About two-thirds of the population possessing some antibodies against the virus, as found by nationwide serological surveys, will also keep the impact limited, it said.

Share This Story


Comment On This Story

 

Photo Gallery

  
BSE Sensex
NSE Nifty