ADB cuts India's GDP growth forecast to 10% for this fiscal year

The Asian Development Bank on Wednesday slashed India's gross domestic product (GDP) growth forecast to 10 per cent for FY21 (ending in March 2022). The growth projection for the year 2022 (ending March 2023) has improved from 7 per cent earlier to 7.5 per cent.

On the inflation front, the country's inflation rates have been forecast at 5.5 per cent in 2021 and 4.8 per cent in 2022. The current account deficit for 2021 could be around -1.1 per cent and -1.0 per cent in the year 2022.

"The outbreak, however, dissipated faster than anticipated, resulting in several states easing lockdown measures and returning to more normal travel patterns. The economy is expected to rebound strongly in the remaining three-quarters of FY2021, and grow by 10 per cent in the full fiscal year before moderating to 7.5 per cent in FY2022," said the Asian Development Outlook Update (ADOU) 2021.

Also read: India will be 3rd largest importer by 2050: UK report

In its previous Asian Development Outlook forecast this year, the multilateral funding agency had revised down the growth forecast to 7.2 per cent from 7.3 per cent in April. "Because consumption will recover only gradually, government spending and exports will contribute more to FY2021''s growth than they did in the previous fiscal year," the ADB report said.

Also read: COVID-19 impact: Household debt likely fell to 34% in Q1, says SBI Ecowrap

According to ADB, growth in the People's Republic of China (PRC) will remain strong, despite a protracted recovery in household consumption. "The GDP growth forecast (for China) remains unchanged at 8.1 per cent in 2021 and 5.5 per cent in 2022, as a solid export performance and higher fiscal support in the second half of 2021 keep growth on track," the report said.

Also read: No evidence of high asset prices feeding in general inflation: Shaktikanta Das