India’s GDP to grow at 11%, Covid surge a worry: ADB
NEW DELHI: The Asian Development Bank (ADB) on Wednesday said the Indian economy is projected to grow at 11% in the current financial year on the back of the strong vaccination programme, but cautioned that second wave is worrying.
“India’s economy is expected to grow 11% in 2021-22, amid a strong vaccine drive. However, the recent surge in Covid-19 cases may put this recovery at risk,” said the Asian Development Outlook (ADO) 2021.
Continued economic recovery boosted by increased public investment, vaccine roll-out and a surge in domestic demand will trigger this strong rebound, the ADB said.
The predictions are based on assumption that there is extensive vaccine deployment across the country and the second wave of infections is contained.
According to the ADB’S flagship publication Asian Development Outlook, “the second wave of Covid-19 cases is worrying, especially if vaccine roll-out faulters or fails to contain it.”
Another risk is the further tightening of global financial conditions, which would apply pressure on India’s market interest rates and therefore affect economic normalisation, the report added.
Going further, the ADB forecasts India’s economic growth to moderate to 7% in 2022-23, on account of disappearance of base effect.
The economy is expected to have contracted by 8% in 2020-21, in line with the government’s second advance estimate, it said.
ADB country director for India Takeo Konishi said India’s economy faced its worst contraction in 2020-21 due to the Covid-19 shock.
“With large government stimulus and the ongoing vaccination drive, we expect economic activity will continue its recovery that started from the third quarter of 2020-21 and rebound strongly in the current fiscal year with an uptick in domestic demand, especially in urban services,” said Konishi.