News and Events

Business Line reported that Asian Development Bank has lowered India’s growth forecast for the current fiscal to 5.6% from 7% projected earlier, citing falling global demand and impact of delayed monsoon on agricultural production.

 

 Rhe ADB’s Asian Development Outlook 2012 Update said that India, however, can reverse the trend of falling growth by promoting economic reforms and taking steps to improve investment climate.

 

 For the Asian region as a whole, the ADB Update expects the Gross Domestic Product growth rate to drop to 6.1% in 2012 from 7.2%in 2011. Growth rate for the region has been projected at 6.7% in 2013.

 

 ADB said that “The deceleration of the region’s two giants the People’s Republic of China and India in tandem with the global slowdown, is tempering earlier optimism.”

 

As for India, it said that growth rate will decelerate to from 6.5% in 2011-12 to 5.6% in the current fiscal. ADB had earlier projected the country’s growth rate at 7% for 2012-13.

 

The growth rate for 2013-14, according to the ADB Update, has now been estimated at 6.7% down from 7.5% projected earlier.

 

 Falling global demand and a delayed monsoon curtailing agricultural growth have exacerbated India’s recent economic slowdown, and have led to reduced growth forecasts by the ADB for fiscal years 2012 and 2013.

 

 ADB Chief Economist Changyong Rhee said that “India can start reversing this trend by improving its investment climate and expediting reforms.”

 

The delayed monsoon and weaknesses in the agricultural supply chains, coupled with rising costs of fertilisers and irrigation, are likely to result in subdued farm growth and sustain pressure on food prices.

 

Moreover, industrial output is expected to remain subdued in 2012-13, while weak demand from industrialised countries continues to take its toll on exportsd.

 

Mr Rhee further noted that “Tight monetary policy to counter persistently high inflation and a high deficit leave little room for policy to stimulate growth. However, restoring investor confidence can help jump-start critical infrastructure projects that could get the economy moving.”