India’s GDP to grow at 11% this fiscal: ADB

New Delhi, April 28

The Asian Development Bank (ADB) on Wednesday said the Indian economy is projected to grow at 11 per cent in the current financial year on the back of the strong vaccination programme, but cautioned that the second Covid wave is worrying.

"India's economy is expected to grow 11 per cent in fiscal year (FY) 2021, which ends on March 31, 2022, 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 rollout 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 Covid is contained.

According to ADB's flagship publication Asian Development Outlook, "The second wave of Covid-19 cases is worrying, especially if vaccine rollout faulters or fails to contain it."

Another risk is 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 per cent in FY2022, on account of disappearance of base effect.

The economy is expected to have contracted by 8 per cent in FY2020, 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 FY2020 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 FY2020 and rebound strongly in the current fiscal year with an uptick in domestic demand, especially in urban services," said Konishi.

2nd wave poses downside risk to growth: Samp;P

New Delhi: Samp;P Global Ratings on Wednesday said the second wave of Covid poses downside risks to India's GDP and heightens the possibility of business disruptions. The second wave brings in uncertainty and a drawn-out Covid outbreak will impede India's recovery, it said. "This may prompt us to revise our base-case assumption of 11% growth over fiscal 2021-2022, particularly if the government is forced to reimpose broad containment measures," Samp;P said. PTI

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