HYDERABAD: The Asian Development Bank (ADB) on Friday revised India’s FY21 GDP forecasts downwards to 4 per cent from its earlier estimate of about 6 per cent.In its Asian Development Outlook (ADO) 2020 released Friday, the Manila-based lender said GDP growth in India was forecast to slow further to 4 per cent in FY21 before strengthening to 6.2 per cent in the next fiscal.
Stating that Covid-19 has not yet spread extensively in India, ADB said measures to contain the virus and a weaker global environment will whip up headwinds, offsetting support from corporate and personal income tax cuts as well as financial sector reforms, which are meant to revive credit flows.According to ADB, the country’s growth slowdown, like other economies, is largely due to the ongoing global health emergency, due to which several countries are under lockdown.
“We face extraordinarily challenging times. The outbreak of coronavirus (Covid-19) is disrupting people’s lives and interrupting business and other economic activities around the world,” said ADB president Masatsugu Asakawa.ADB added that growth will remain subdued after the country suffered a sharp slowdown last year, from 6.1 per cent in FY19 to 5 per cent, as a credit crunch that originated in the non-banking financial sector severely hampered bank lending.
Similarly, the whole of South Asia too will likely face a milder slowdown, given that plummeting commodity prices were putting severe burden on some countries.While developing nations within Asia will weaken tremendously due to the pandemic, considering the region’s deep integration with the global economy through tourism, trade and remittances, growth will decelerate to 4.1 per cent in FY21 and then recover to 6 per cent in FY22, largely tracking the trend in the dominant Indian economy, according to ADB.
Likewise, following a disappointing fiscal, growth in the Asia and Pacific region is expected to slow sharply to 2.2 per cent in FY21 under the effects of the current health emergency and then rebound to 6.2 per cent in FY22, it added.