Asian Development Bank in its outlook for the financial year 2020-21 said that India's economic growth is likely to slow down to 4% this fiscal on the back of the current global health emergency.
Growth in India will remain subdued after the country suffered a sharp slowdown last year, from 6.1% in fiscal 2019 to 5%, 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% in FY21 before strengthening to 6.2% in the next fiscal."
On March 27, influential Moody's Investors Service had slashed India's 2020 GDP growth projection from its earlier forecast of 5.3% to 2.5% amid the global Coronavirus pandemic.
“The governments of India (Baa2 negative) and South Africa (Baa3 negative) have announced 21-day lockdowns. We expect these measures to dampen economic growth in both countries this year. For India, we are now projecting growth rates of 2.5% in 2020 followed by 5.8% next year," Moody’s said in its Global Macro Outlook.
It expects the G-20 Economies to experience a shock in the first half of the year, which will have an effect on the rest of the year before the country will rebound in 2021. Moody's has also pegged Coronavirus source China's 2020 GDP growth to 3.3% in 2020 and forecasted it to grow at 6% in 2021, backed by consumer demand growth.
(With PTI inputs)