The Asian Development Bank (ADB) on Wednesday trimmed its forecast for India's economic growth in 2019-20 to 5.1 per cent saying consumption was affected by slow job growth and rural distress aggravated by poor harvest.
In September, ADB forecast India's GDP to grow 6.5 per cent in 2019-20 and 7.2 per cent in the year thereafter. "India's growth is now seen at a slower 5.1 per cent in fiscal year 2019-20 as the foundering of a major non-banking financial company in 2018 led to a rise in risk aversion in the financial sector and a credit crunch. Also, consumption was affected by slow job growth and rural distress aggravated by a poor harvest," it said.
ADB said growth should pick up to 6.5 per cent in the next fiscal year with supportive policies.
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With the forecast cut, ADB follows the likes of Wall Street brokerage Goldman Sachs and rating agency Crisil. Both have slashed India's GDP growth projections from the previous 6 per cent range to 5.3 per cent. Interestingly, the Reserve Bank of India, too, slashed the GDP growth rate projection for the current economic year from 6.1 per cent to 5 per cent last week.
The sharp come days after India released its second quarter GDP figures at 4.5 per cent, the slowest expansion in about 26 quarters. In more worsening signs of economic slowdown, the growth in core sector contracted further month-on-month, from 5.2 per cent to 5.8 per cent, in October. During the six-month period (April-September 2019), the Indian economy grew 4.8 per cent as against 7.5 per cent in the same period a year ago.
(With PTI inputs)
