Asian Development Bank cuts India's FY20 GDP growth forecast to 6.5%

New Delhi: Asian Development Bank (ADB) President Takehiko Nakao meets Union Finance and Corporate Affairs Minister Nirmala Sitharaman in New Delhi on Aug 28, 2019. (Photo: IANS/PIB)
New Delhi, The Asian Development Bank (ADB) has revised its outlook for India's GDP growth for the financial year 2019-20 to 6.5 per cent from the previous projection of 7 per cent due to domestic reasons such as the pre-election decline in investment and tighter credit conditions.

However, the Manila-based bank in its supplement to the Asian Development Outlook (ADO) released on Wednesday said that the growth may improve in FY 2020-21 to 7.2 per cent.

"India's growth forecast for fiscal year 2019-20 is lowered to 6.5 per cent after growth slowed markedly to 5 per cent in the first quarter, April-June," the ADB said.

"India is expected to rebound to 7.2 per cent growth in fiscal 2020-21 and join

most other subregional countries in performing at or near their ADO 2019 growth

forecasts for the next year," it said.

Besides, the Manila-based bank said the contribution of investment in India's growth fell substantially because of subdued bank lending and uncertainty ahead of elections in April-May.

The revised forecast comes a month after official data showed that severe slowdown in manufacturing activity in the country pulled India's GDP growth rate in the first quarter (Q1) ended June 30 down to 5 per cent, marking the fourth successive quarter of decline in growth.

From 8 per cent in Q1 of 2018-19 to 5 per cent in this quarter, the GDP has fallen by 3 per cent in barely a year's time.

On a sequential basis, the growth rate came lower than the 5.8 per cent in Q4 of 2018-19.

Currently, a culmination of factors such as high GST rates, natural calamities, subdued farm produce prices, stagnant income levels and low job generation have led to the slowdown.

Various sectors are facing a sales downturn. Industries such as fast-moving consumer goods (FMCG) and automobiles have been the hardest hit.
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