ADB on Wednesday said the Indian economy is projected to grow at 11 per cent in the current financial year on the back of the strong vaccination programme, but cautioned that second wave of Covid is worrying.
"India's economy is expected to grow 11 per cent in fiscal year (FY) 2021, which ends on March 31, 2022, amid a strong vaccine drive. However, the recent surge in Covid-19 cases may put this recovery at risk," said the Asian Development Outlook (ADO) 2021.
Continued economic recovery boosted by increased public investment, domestic demand will trigger this strong rebound, ADB said.
The predictions are based on assumption that there is extensive vaccine deployment across the country and the second wave of coronavirus is contained.
According to ADB's flagship publication Asian Development Outlook, "the second wave of COVID-19 cases is worrying, especially if vaccine rollout faulters or fails to contain it."
Another risk is the further tightening of global financial conditions, which would apply pressure on India's market interest rates and therefore affect economic normalisation, the report added.
Going further, ADB forecasts India's economic growth to moderate to 7 per cent in FY2022, on account of disappearance of base effect.
The economy is expected to have contracted by 8 per cent in FY2020, in line with the government's second advance estimate, it said.
ADB Country Director for India Takeo Konishi said India's economy faced its worst contraction in FY2020 due to the COVID-19 shock.