The Asian Development Bank has pegged India's growth rate downwards for the next fiscal to 7.4 per cent, from 7.6 per cent this year, stating further reforms will help the country remain one of the fastest growing economies in the world. “India's economy will see a slight dip in growth in FY 2016. The economy will again accelerate in FY 2017 as the benefits of banking sector reforms and an expected pickup in private investment begin to flow,” ADB said in statement.
The bank's growth forecast of 7.4 per cent for 2016-17 is lower than its earlier projection of 7.8 per cent. “In its latest Asian Development Outlook, ADB projects India's gross domestic product to grow 7.4 per cent in FY2016, slightly below the FY2015 estimate of 7.6 per cent. In FY2017 growth is forecast to rise 7.8 per cent.” The bank said the weak global economy will continue to weigh on exports in the next fiscal, offsetting a further pickup in domestic consumption, partly due to an impending salary hike for government employees. “India is one of the fastest growing large economies in the world and will likely remain so in the near term,” ADB's chief economist Shang-Jin Wei said. “The potential growth of the country can be raised further if it can successfully implement necessary reforms, including unifying the tax regime, improving labour market regulations as opening further to foreign direct investment and trade.”
Finance Ministry's Economic Survey 2015-16 tabled in the parliament last month has tagged India's growth for the next fiscal in the 7-7.5 per cent range. “The government is expected to maintain its ongoing fiscal consolidation efforts, with the deficit cut to 3.5 per cent of GDP in FY2016, supported by tax revenue growth and asset sales. However, India still faces significant challenges to finance the infrastructure it needs to deliver sustainable growth, with funding requirements estimated at around $200 billion a year through FY2017.”
