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Coronavirus effect: ADB pegs India's growth rate at 4% in FY21

Gross domestic product (GDP) growth in India is forecast to slow further to 4 per cent in FY21 before strengthening to 6.2 per cent in the next fiscal, according to Asian Development Outlook

twitter-logoPTI | April 3, 2020 | Updated 10:37 IST
Coronavirus effect: ADB pegs India's growth rate at 4% in FY21

India's economic growth is likely to slow down to 4 per cent this fiscal on the back of the current global health emergency, Asian Development Bank said in its outlook for financial year 2020-21 on Friday.

Growth in India will remain subdued after the country suffered a sharp slowdown last year, from 6.1 per cent in fiscal 2019 to 5 per cent, as a credit crunch that originated in the non-banking financial sector severely hampered bank lending , the Manila-based lender said.

"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 Masatsugu Asakawa, President of Asian Development Bank.

Noting 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.

In its Asian Development Outlook (ADO) 2020 the lender said: Gross domestic product (GDP) growth in India is forecast to slow further to 4 per cent in FY21 before strengthening to 6.2 per cent in the next fiscal. South Asia will face a milder slowdown, it stated.

"Growth in South Asia will decelerate to 4.1 per cent in 2020 and then recover to 6 per cent in 2021, largely tracking the trend in the dominant Indian economy," according to ADO 2020.

After a disappointing 2019, growth in the region (Asia and Pacific) is expected to slow sharply to 2.2 per cent in 2020 under the effects of the current health emergency and then rebound to 6.2 per cent in 2021, region wise, as per the outlook.

Developing Asia will weaken tremendously due to the pandemic, considering the region's deep integration with the global economy through tourism, trade, and remittances, it said, adding that plummeting commodity prices are also placing a severe burden on some countries.

Also read: S&P downrates India's growth prediction to 5.2% amid coronavirus pandemic

Also read: Coronavirus in India Live Updates: Doctor from Dharavi tests COVID-19 positive; second case from slum

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