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Recently, Asian Development Bank has released its flagship Asian Development Outlook (ADO) 2021.
About
- Asian Development Outlook (ADO) is a series of annual economic reports on the Developing Member Countries (DMCs) of the Asian Development Bank (ADB).
- An uncertain pandemic trajectory with a prolonged second wave of Coronavirus pandemic despite the vaccination push can affect India’s economic normalization.
- The forecast by ADB, expects the economic impact of the second wave to be relatively low compared to the first wave in line with the global experience.
Major Highlights
- Growth Projection
- India: It projects India’s gross domestic product (GDP) will rebound strongly by 11.0% in fiscal year (FY) 2021-22 due to continued economic recovery boosted by increased public investment, vaccine rollout, and a surge in domestic demand.
- It forecasts India’s economic growth to moderate to 7.0% in FY2022.
- The economy is expected to have contracted by 8.0% in FY2020 in line with the government’s second advance estimate.
- Developing Asia: The gross domestic product (GDP) of South Asia is expected to rebound to 9.5% this year, following a contraction of 6% in 2020, before moderating to 6.6% next year (2022).
- The region’s growth is forecast to moderate to 5.3% in 2022 and most economies in developing Asia will see healthy growth this year and in 2022.
- Excluding the newly industrialized economies of Hong Kong, China; the Republic of Korea; Singapore; and Taipei, China, developing Asia’s economic activity is expected to grow 7.7% this year and 5.6% in 2022.
- China’s gross domestic product (GDP) is forecast to expand 8.1% in 2021 and 5.5% in 2022.
- Developing Asia comprises 46 members of ADB list on the basis of geographic group.
- India is also part of Developing Asia.
- Challenges Faced by the Asian Economies
- Increasing Geopolitical tensions.
- Financial turmoil from tightening financial conditions.
- Production bottlenecks.
- Long term scarring. This includes learning losses due to school closures.
- Learning and Earning Losses from COVID-19 School Closures
- The COVID-19 pandemic severely disrupted education. Schools were closed to varying degrees across developing Asia.
- Though, remote learning strategies were deployed in most economies to keep students learning. But many students are constrained by access to resources like computers and the internet.
- Students in developing Asia have lost 29% of a year of learning on average.
- Estimates show that students affected by school closures stand to lose an average of $180 or a 2.4% decline in expected annual earnings.
- Indian Analysis Favouring Economic Growth
- Increased expenditure by the Indian Government on water, health care, and sanitation will strengthen the nation’s resilience against future pandemics.
- Private investment has been expected to pick up as well as the accommodative credit conditions.
- A faster vaccine rollout will help in increasing the urban demand or the services while the rural demand will be boosted by the government’s support to farmers and agricultural growth.
- The agricultural sector will be further boosted by the forecast of a normal monsoon and the bumper harvest of the summer crops.
- Push to the manufacturing sector by the Indian Government through the production-linked incentive scheme will further expand domestic production ang global supply chains.
- Policies to Minimize Learning and Earning Losses
- Continue strengthening information and communication technology infrastructure. Heavy connectivity use during the COVID-19 pandemic has tested the limits of these networks in several countries.
- Continue to use diverse modalities to provide accessible learning experiences for students in remote areas. Where online learning is not possible, these modalities can include television, radio courses, and paper-based learning.
- Continue to provide devices for children from disadvantaged backgrounds
- Provide systematic training on digital literacy for students and parents, and effective remote pedagogy for Teachers.
- Develop and maintain a feedback loop between developers and administrators of remote learning platforms.
- Encourage social interaction between students, teachers, and parents within the remote learning environment.
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Gross Domestic Product (GDP)
Asian Development Bank (ADB)
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Source: TH
