The Asian Development Bank (ADB) has revised its GDP estimate for India to a 9 per cent contraction in FY21 from 4 per cent dip estimated in June as the intensifying coronavirus pandemic weighs heavily on economic activity and consumer sentiment in the country. 

‘India imposed strict lockdown measures to contain the spread of the pandemic, and this has had a severe impact on economic activity,’ said ADB Chief Economist Yasuyuki Sawada. 

On Monday, rating agency S&P Global Ratings also projected the India economy to contract by 9 per cent. In comparison, last week Fitch Ratings and Moody’s Investors Service cut their GDP estimates for FY21 to contraction of 14.8 per cent and 11.5 per cent respectively, while investment bank Goldman Sachs sees GDP to shrink by 10.5 per cent during the financial year.

ADB said India’s growth outlook remains highly vulnerable to either a prolonged outbreak or a resurgence of cases, with the country now having one of the highest numbers of COVID-19 cases globally. 

‘Other downside risks include increasing public and private debt levels that could affect technology and infrastructure investment, as well as rising nonperforming loans caused by the pandemic. This could further weaken the financial sector and its ability to support economic growth,’ it added. In FY2021-22, ADB expects the economy to revive to grow at 8 per cent.