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Economic growth in developing Asia remains broadly stable, but a slight slowdown in India has trimmed the region’s growth outlook for 2016.
Economic growth in developing Asia remains broadly stable, but a slight slowdown in India has trimmed the region’s growth outlook for 2016.

ADB Cuts India’s 2016 Growth to 7%

The junking of old 500 and 1,000 rupee notes will likely affect largely cash-based sectors in the country, including small- and medium-scale businesses

ADB Cuts India’s 2016 Growth to 7%

The Asian Development Bank on Tuesday trimmed its 2016 growth estimate for India to 7% from the previous 7.4% on account of demonetization, weak investment and agricultural slowdown. But India’s growth forecast for 2017 was kept at 7.8%.
“Economic growth in developing Asia remains broadly stable, but a slight slowdown in India has trimmed the region’s growth outlook for 2016,” said the new ADB report, news outlets reported.
In a supplement to its Asian Development Outlook 2016 Update report, ADB has downgraded 2016 growth for Asia to 5.6%, below its previous projection of 5.7%. For 2017, growth remains unchanged at 5.7%.
“India’s tempered growth projection to 7% from the previously forecast 7.4% in 2016 is due to weak investments, a slowdown in the country’s agriculture sector, and lack of available cash due to the government’s decision to ban high-denomination banknotes,” ADB said.
The junking of old 500 and 1,000 rupee notes has largely affected cash-based sectors in the country, including small- and medium-scale businesses.
“The effects of the transition are expected to be short-lived and the Indian economy is expected to grow at 7.8% in 2017,” it said.
The Reserve Bank of India last week cut the GDP growth forecast to 7.1%, from 7.6%, saying that short-term disruption in economic activity and demand compression arising out of demonetization have led to downside risks to growth.
ADB said South Asia is the most dynamic part of the region, with growth expected at 6.6% this year, down from the previous forecast of 6.9%. South Asia’s growth is estimated at 7.3% in 2017.
East Asia’s growth projections for 2016 and 2017 were maintained. Growth will reach 5.8% this year, with a slight moderation to 5.6% in 2017, the lender said.
China’s GDP growth was forecast to hit 6.6% this year, driven by strong domestic consumption, solid wage growth, urban job creation, and public infrastructure investment. The forecast for 2017 was kept unchanged at 6.4%.
In Southeast Asia, growth forecasts remained unchanged at 4.5% for this year and 4.6% for next year. The Pacific will see growth of 2.7% this year, which is set to pick up to 3.3% in 2017.
The outlook for Central Asia was retained at 1.5% for this year and 2.6% for next year, as the ongoing recession in the Russian Federation and low global commodity prices for oil and natural gas continue to dampen growth in the sub-region.

 India’s Household Debts
India’s indebtedness rose sharply in both urban and rural areas over 2002 to 2013, with almost a third of rural households and more than a fifth of urban homes being in debt in 2013, a government survey showed.
About 31.4% rural households and 22.4% urban homes were in debt, up from 26.5% and 17.8% respectively in 2002, according to the All-India Debt and Investment Survey done by the National Sample Survey Office in the 70th round.
Although the key indicator report of the survey was released in December 2014, within a year of the completion of survey, NSSO has now released a detailed report with more tables and statements based on the same set of validated data.
The average cash dues outstanding per household have been estimated at Rs 32,522 ($481.85) and Rs 84,625 for rural and urban areas respectively, while the average amount of debt per indebted household was Rs 103,000 and Rs 378,000 in the rural and urban areas respectively.
The survey report showed that in rural areas, nearly 12% of all households opted for short-term and medium-term borrowing, whereas 10% of the households availed themselves of long-term loans.
As for collateral, personal security accounted for 20% in rural and 12% in urban areas among the types of security against loan, followed by 6% in rural and 5% in urban areas against mortgage of immovable property. The report revealed a higher level of indebtedness in cultivator households than in non-cultivator households. In rural areas, 40% of the loans were taken for business purpose compared to 18.3% in urban households.

 

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