The Asian Development Bank has downgraded India's economic growth forecast for the current financial year to 10 per cent on Tuesday, from 11 per cent projected in April, on account of the adverse impact of the coronavirus pandemic.
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.
"Then a second wave of the pandemic induced many state governments to impose strict containment measures.
"New COVID-19 cases daily peaked at more than 4,00,000 in early May, then fell to a little over 40,000 in early July.
"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 2021 to 10 per cent, reflects large base effects," it said.
The ADO was released in April.
The 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.
With regard to China, the ADB supplement said the expansion in the People's Republic of China is still projected at 8.1 per cent in 2021, and 5.5 per cent in 2022, as favorable domestic and external trends align with April forecasts.
On South Asia, ADB said the economic outlook for the subregion is dampened by new waves of COVID-19 hitting the subregion from March to June 2021.
The adverse economic impact of these new waves is expected to be limited, with businesses and consumers better able to adapt to the pandemic and containment measures now than they were a year ago, it said.
"The GDP growth forecast for the subregion in 2021 is downgraded from 9.5 per cent in ADO 2021 to 8.9 per cent but upgraded for 2022, from 6.6 per cent to 7 per cent," ADB said in the supplement.
Recovery is under way in developing Asia, but with the growth projection for this year revised down slightly from 7.3 per cent in the Asian Development Outlook 2021 in April, to 7.2 per cent following renewed virus outbreaks in some economies.
The projection (developing Asia) for 2022 is upgraded from 5.3 per cent to 5.4 per cent, it added.