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Indian Economy to Contract by Nine Percent: Asian Development Bank

ADB

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New Delhi: India’s economic growth to contract by 9 percent in the current fiscal, the Asian Development Bank (ADB) predicted on Tuesday. The growth outlook remains highly vulnerable to either a prolonged outbreak of the pandemic or a resurgence of cases, it said.

“India imposed strict lockdown measures to contain the spread of the pandemic and this has had a severe impact on economic activity,” Asian Development Bank Chief Economist Yasuyuki Sawada said.

With lockdowns stalling private spending, ADB said GDP will shrink by 9 percent in April 2020 to March 2021, sharply down from its June’s forecast of (-) 4 percent.

Other downside risks include increasing public and private debt levels that could affect technology and infrastructure investment, as well as rising non-performing loans caused by the pandemic that could further weaken the financial sector and its ability to support economic growth.

However, in its Asian Development Outlook (ADO) 2020 update, ADB projected a strong recovery for the Indian economy in 2021-22, with the Gross Domestic Product (GDP) growing by 8 percent as mobility and business activities resume more widely.

ADB joins a chorus of international agencies that have predicted a contraction in the Indian economy in the current fiscal.

This will be the first time in four decades that the Indian economic growth will contract.

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