ADB cuts India growth forecast to 10%, sees faster inflation at 5.5%
With downside risks dominating the economic outlook, the Asian Development Bank has lowered its projection for India's GDP growth in 2021-22 to 10% from 11% before. Rising input prices, according to the ADB, will push inflation to 5.5 percent, up from the prior forecast of 5.2 percent. While the COVID-19 second wave has slowed the economy since the ADB predicted 11% growth in April, the bank forecasts the economy to ‘rebound strongly in the next three quarters and rise by 10% in the whole fiscal year before slowing to 7.5 percent in 2022-23.' Still, according to the ADB's head of macroeconomic research Abdul Abiad, the risks to the forecast are skewed to the downside and are mostly dependent on the pandemic's progress. Dr. Abiad stated, "The major dangers are centred around the epidemic." “Countries are still at danger of fresh outbreaks until we get to the stage where we have truly universal immunisation, as the Delta form is considerably more infectious. So the major risk weighing on the forecast is that if vaccination hasn't spread broadly, the health system will become overburdened, and the government would have to reintroduce movement restrictions,” he added. Dr. Abiad admitted that the ADB's forecast was a "tad optimistic" when compared to the Reserve Bank of India's new 9.5 percent growth forecast for this year, saying, "We didn't change it much from our earlier forecast because we have only had one quarter of the fiscal year yet, and with the wide uncertainty, we wanted to stick to that and see how things evolve."