Propelled by a rise in domestic demand and exports, India’s Gross Domestic Product (GDP) is expected to grow at the rate of 10 percent during the Financial Year 2021.
Making this forecast here Asian Development Bank (ADB) in its Asian Development Outlook (ADO) 2021 Update released here on Wednesday said, “The forecast, for the 12 months ending 31 March 2022, takes into account disruptions in economic activity caused by the second coronavirus disease (COVID-19) pandemic wave, which adversely impacted services, domestic consumption, and the urban informal sector.”
The ADB, however, puts the rate of GDP growth at a moderate 7.5 percent in the Financial Year 2022 with the assumption that there would be a limited impact of the pandemic owing to accelerated vaccination drive and better preparedness by health and other sectors.
“The forecast assumes a relatively limited economic impact from the pandemic going forward thanks to an accelerated vaccination campaign and better preparedness among businesses, households, and the health care sector,” the development bank maintained,” an ADB note stated.
ADB Country Director for India Takeo Konishi said thanks to various interventions especially in the health sector, India is poised to see a fast recovery from the impact of the Covid 19 pandemic.
“The Indian economy is showing encouraging signs of recovery as the effects of the second wave dissipate. The government’s vaccination drive, its new fiscal stimulus package, and initiatives to free more resources for infrastructure development, along with measures to strengthen health-related interventions, are helping speed up recovery,” Konishi said.
According to ADB India’s economy is projected to rebound in the last 3 quarters of FY2021, as reflected in improvements in electronic waybills, mobility data, and the purchasing managers’ index. In the first quarter, GDP rebounded 20.1 percent from a year earlier despite a slowdown as a result of the second wave of the pandemic.
On the negative side, the bank has forecast that private consumption and investment are projected to remain weak due to the pandemic’s impact on household incomes, spending capacity, and lending. It however said the government’s national monetization plan is likely to drive public investment to boost infrastructure development.
“The growth in the agriculture sector will remain resilient, yet marginally lower with the pandemic’s spread into rural areas and delayed monsoon. Exports will rebound, supported by the recovery in global demand,” according to the bank which said RBI’s accommodative stance was likely to help curb any inflationary hiccups in the economy.
“An easing of supply chain disruptions will moderate inflation to 5.5 percent in FY2021 and 4.8 percent in FY2022, but rising global prices for oil and other commodities, as well as domestic food prices, will continue to exert inflationary pressure. The trade deficit in FY2021 may widen due to rising imports amid higher domestic demand, before narrowing to 1.0 percent in FY2022 as economic growth moderates,” the ADB forecast further said.