India’s economic contraction for the current financial year could be 9 per cent, the Asian Development Bank (ADB) said. In June, ADB had predicted a 4 per cent contraction.
The forecast comes just over a fortnight after the country reported a 23.9 per cent contraction in its gross domestic product (GDP) for the April-June quarter owing to a stringent nationwide lockdown aimed at containing the spread of coronavirus.
The multilateral agency also noted that the government had little fiscal space to roll out a larger stimulus package with the economy weakening even before the pandemic struck.
“Indian GDP is expected to fall by 9 per cent in the whole of this fiscal year and then grow by 8.0 per cent in the next,” it said.
According to the ADB, south Asian economy was expected to shrink by a steep 6.8 per cent in 2020 and rebound by 7.1 per cent in 2021.
It noted that as the coronavirus pandemic continued to expand regionally and globally, containment measures to counter it stifled economic activities. Domestic demand and production have plummeted, plunging global economic activity and slashed external demand, it added.
Governments in the region responded with diverse policy measures, it said, citing the ‘developing’ Asian countries.
Citing recent data, the ADB said that the crisis may have bottomed out, but the picture across the region is mixed.
It also said that strict and extended lockdown caused output to contract by 23.9 per cent in the April-June quarter, and various high-frequency indicators are improving, shows continued economic weakness.