The Asian Development Bank (ADB) estimates India's gross domestic product (GDP) growth to see a sharp bounce of 11% in current fiscal on the back of continued economic recovery boosted by increased public investment, vaccine rollout and surge in domestic demand. However, the recent surge in COVID-19 cases may put this recovery at risk. India's GDP is expected to expand 7.0% in FY2022.
The strong recovery is being driven by an economy normalizing from last year's deep contraction-and this will be backed by a large COVID-19 vaccine rollout. A sharp increase in capital expenditure and accommodative financial policies will also support the rebound. Rising demand in the US supported by the fiscal stimulus package will help India's growth, as the US is its largest export market. But India's COVID-19 cases have resurged since February 2021, and if not controlled, they present a considerable downside risk to the recovery, the ADB noted.
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