India Said to Forecast 11% Growth Buoyed by Vaccine Roll Out

(Bloomberg) -- India is predicting Asia’s third-largest economy will expand 11% in the year starting April betting that the vaccine roll out will contain the pandemic, while low interest rates and measures to lure investment will spur business activity, people with knowledge of the matter said.

The return to growth will follow an estimated 7.7% contraction in gross domestic product in the year ending March, the people said, asking not to be identified as the numbers aren’t public. The projection formed the basis of drawing up budget proposals which will be unveiled on Feb. 1, after the presentation of the Economic Survey -- an annual report card -- on Friday.

The forecast for next year is in line with the International Monetary Fund’s estimate for 11.5% expansion, which will once again make India the fastest-growing major economy in the world ahead of China’s 8.1% pace.

A finance ministry spokesman was not immediately available for a comment.

Prime Minister Narendra Modi’s administration is under pressure to shore up economic growth after the pandemic resulted in widespread job losses and pushed millions into poverty due to one of world’s strictest lockdowns that lasted nearly two months. A raft of reforms have been implemented since, including an incentive program to boost local manufacturing and tweak archaic labor laws to improve ease of doing business.

The government also approved the roll out of vaccines this month. Besides, the administration has ensured a step up in spending to reverse the growth contraction and there has been a significant increase in capital expenditure in the three months ended Dec. 31, the people said.

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