The Asian Development Bank (ADB) has downgraded India’s economic growth forecast for the current financial year to 10 per cent from 11 per cent projected earlier this year. India’s GDP growth recovered to 1.6 per cent in the last quarter of fiscal year ended March 2021, narrowing contraction in the whole fiscal year from 8 per cent estimated in April to a revised 7.3 per cent, the multilateral funding agency said in the Asian Development Outlook (ADO) Supplement.
This downgrade is the result of adverse impact of the Coronavirus pandemic. “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 (released in April) 2021 to 10 per cent, reflects large base effects,” the statement said. The ADO was released in April.
Adding more to it, the growth projection for FY2022 (ending in March 2023), by which time much of India’s population is expected to be vaccinated, is upgraded from 7 per cent to 7.5 per cent as economic activity normalizes.
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.
Indian consumer price inflation rose to 6.3 per cent year-on-year in May as both food and fuel inflation outpaced expectations.
“This Supplement raises the inflation forecast for India in FY2021 (fiscal ending March 2022) by 0.3 percentage points to 5.5 per cent while keeping the forecast for FY2022 at 4.8 per cent,” ADB said.
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 7 per cent to 7.5 per cent as economic activity normalises, said the Manila-headquartered funding agency.