ADB Anticipates The Indian Economy To Contract By 9% In Financial Year 2021-22 Due To The COVID-19 Pandemic

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India has become one of the top countries consisting of the highest number of Covid-19 cases globally. Over 4.9 million cases have been recorded as on 13th September 2020 while the US stands at 6.5 million cases. The increasing rate of spread of infection has hampered the growth of the country and it remains vulnerable till the outbreak or resurgence of cases. India had imposed strict lockdown to stop the spread of the pandemic which has had a severe impact on economic activities. The country’s GDP stands at a contraction of 23.9% for the April-June quarter.

The chief economist Yasuyuki Sawada of the Asian Development Bank said that it is very much required to provide services and support in the country so as to get rid of the Covid-19 as soon as possible so that a sustainable platform is provided for the economy’s recovery for the next fiscal year and beyond. He also cautioned that it could be harmful for the economy to raise non-performing loans because it can weaken the financial sectors and increasing the public and private debt levels could also affect the technology and infrastructure investment. ADB has also forecasted that the countries in the developing Asia will hardly grow in 2020 and there is only a possibility of 0.1% growth in 2020.

India’s current account deficit is anticipated to shrink to 0.3% of GDP this fiscal year and then widen to 0.6% of GDP in the fiscal year 2021 with exports expected to recover as global growth rebounds.  ADB has affirmed that the fiscal deficit is expected to rise significantly in the next financial year as government revenues fall and expenditures rise. It also expects the Indian economy to contract by 9% in the financial year as against 4% forecast in June as the pandemic has a large impact on the economy.

-Bhavya Nayyar (LC Content Writer)

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