Asian Development Outlook (ADO) 2022

India’s GDP growth has been forecasted by the Asian Development Bank (ADB) to 7.5 per cent in 2022-23 from 2021-22’s estimated 8.9 per cent. The report has also suggested that the growth will pick up and reach 8 per cent in 2023-2024.

Overview:

  • The Russia-Ukraine conflict’s implications have been factored in by the ADB for India.
  • Due to this crisis oil prices will rise.
  • The COVID-19 pandemic’s severity will also subside with the rise in the rate of vaccination.
  • China is expected to grow at 5 per cent in 2022-23 and by 4.8 per cent in 2023-24.

About Oil Prices

The ADB has predicted that although the rise of oil prices will exert pressure on inflation, the impact will be moderated by the stocking up of cheap crude oils by oil refineries and fuel subsidies. The ADB has predicted an inflation rate of 5.8 per cent in 2022-23 and in 2023-24 the rate will be 5 per cent. In 2022 the oil prices will be averaging at around USD 100 or more a barrel.

About Food Prices

In its Asian Development Outlook report, the ADB has highlighted that with the increase in commodity prices food prices are also expected to rise.

India’s Economic Activity

The efficiency of India’s logistics infrastructure, generation of jobs in construction, crowd-in private investment, and sustainable growth will increase due to higher public capital spending. ADB has emphasized that India’s economic activity this year will be dependent on public investment. The capacity utilisation rates of the country will improve in the first half of 2022-23. This will create room for more investments.

About Inflation

Due to the surge in global oil prices, there will be an increase in inflation. Hence, India’s state governments should properly mobilize resources so that the financial resources of the country can be improved which is critical for sustained growth.

About Implementation of GST

The ADB has highlighted that the Goods and Services Tax implementation has reduced the autonomy of the states to raise revenues from sales taxes. Along with this, the pandemic has curtailed the revenues of the states and has increased their burden. Due to this, their 2020-21 and 2021-22 budget deficits surpassed the limit of 3 per cent of State GDP limit, with it reaching as high as 7 per cent.

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