Source: The Hindu Business Line, Oct. 02, 2013
New Delhi: Asian Development Bank (ADB) has lowered its India economic growth forecast for 2013-14 to 4.7 percent, significantly lower than the 6 percent projected in April this year.
In its update to its flagship annual economic publication, Asian Development Outlook 2013, released on Wednesday, the ADB sees Indian economy showing some moderate improvement in growth in 2014-15 at 5.7 percent.
This 5.7 percent growth projection for 2014-15 is however lower than the earlier forecast of 6.5 percent. Indian economy had recorded 5 percent growth in 2012-13.
Indian economy grew 4.4 percent in the first quarter this fiscal expanding at the slowest pace since the global financial crisis.
ADB also sees India’s inflation for 2013-14 at 6.5 percent, below the 7.2 percent forecast in April.
The Manila-based development bank has highlighted that structural constrains are weighing heavily on Indian economy’s prospects for returning to a high growth path.
To convince the markets that India remains on the strong and sustainable growth path, structural reforms must be strengthened to expedite large infrastructure projects already delayed.
Also, foreign direct investment must be encouraged, the ADB said in its new report.
Elections and new Government in early 2014 may help give fresh impetus to resolving structural problems.
The softer currency and expected pick up in economic activity in major markets should see exports grow at a faster clip than in 2012-13.
Policy measures since July 2013 to entice foreign investors back to India to help finance the current account deficit are expected to gain traction in the near future, ADB has said.
ADB sees Asian economies well placed to ride out the storm when the US Federal Reserve begins to partially withdraw stimulus.
The US Central Bank would wait till early 2014 to slow its $ 85 billion monthly bond purchase programme, ADB reckoned.
Last month, the US Fed surprised markets by leaving its $ 85 billion monthly bond buying programme unchanged.