ADB cuts India growth forecast to 7.2% for 2019-20

The Asian Development Bank (ADB) in the recent Asian Development Outlook report has made the following observations in the forecast for the financial year 2019-20:

  • India’s growth forecast was lowered for 2019-20 to 7.2% from 7.6% estimated earlier due to moderation in global demand and likely shortfall in revenue on the domestic front.
  • Despite the downgrade in growth rate, India will remain the fastest growing economy, as China is projected to grow at 6.3% in 2019.
  • ADB has cut the growth estimate to 7% from 7.3% projected in December last year for the just-concluded fiscal (2018-19).
  • Growth is expected to rebound to 7.2% in 2019-20 and 7.3% in 2020-21 as policy rates are cut and farmers receive income support, bolstering domestic demand.
  • This growth turn around will reverse two years of the declining trend as reforms to improve the business and investment climate take effect.
  • The growth forecast for India has some downside risks such as moderation in global demand as financial conditions tighten, uncertainty arising out of global trade tensions, and the weak economic outlook in industrial countries.
  • The growth could suffer if tax revenue falls short or any disruption affects the ongoing resolution of the twin balance sheet problem of bank and corporate balance sheets.

Since India will remain one of the fastest-growing major economy in the world, it has a golden opportunity to cement recent economic gains by becoming more integrated in global value chains, and the young workforce, improving business climate, renewed focus on export expansion.




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