Asian Development Bank lowers India’s growth forecast for 2015-16 to 7.4%

New Delhi(PTI): The Asian Development Bank (ADB) on Tuesday lowered growth projections for India for the current fiscal to 7.4%, from the 7.8% earlier, citing weak monsoon, poor external demand and inability of the government to push economic reforms in Parliament.

Representational image

Representational Image

Though ADB, in its update on Asian Development Outlook (ADO), retained the consumer inflation forecast for India at 4% (plus/minus 0.2%), it cautioned that a possible increase in prices of crude oil in the international market could have adverse implications for prices.

“Forecasts in ADO 2015 are revised down by 0.4 percentage points to 7.4% in 2015-16. Growth is expected to pick up to 7.8% in 2016-17 as key elements of the government s economic reform package reach fruition,” the ADB report said.

In March, ADO had forecast a growth rate of 7.8% for 2015-16 and 8.2% for 2016-17.

It also cautioned that “weak monsoon, flagging external demand, and stalled parliamentary action on structural reforms, including a revamped domestic tax system and eased restrictions on land acquisition and labour, are expected to slow the economy”.

As regards the first quarter (April-June of 2015-16) growth, the ADB report said GDP decelerated “as external demand weakened and investors hesitated awaiting further action on structural reform”.

The report further said because of slowing growth in India and also China, the growth forecasts for GDP in the region has been revised down to 5.8% in 2015 and 6.0% in 2016 from the March estimate of 6.3% for both years.