World Economy

ADB Forecasts India Growth at 7.3 Percent

ADB Forecasts India Growth at 7.3 Percent ADB Forecasts India Growth at 7.3 Percent

The Asian Development Bank expects India’s growth to pick up in the coming financial year ending March 31, 2019 to 7.3% from 6.7% in the current year, said the bank’s Vice-President Zhang Wencai recently in an interview with Xinhua in New Delhi.

Zhang said inflation is likely to remain modest, and average less than 5% in the forthcoming financial year. Some recent measures taken by the government such as goods & services tax, improving ease of doing business, bolstering agriculture and rural development in next year’s budget, are expected to boost growth in the short run, he added.

According to Zhang, India had the potential to grow at over 8% for a sustained period in the medium term due to a variety of factors, such as steady urbanization leading to strong increase in the consumption power and demand for goods and services, favorable demographics with a relatively young workforce, significant improvement in the ease of doing business during the past few years, and emerging as an attractive destination for foreign direct investment.

But, for achieving this, he said, India needs to overcome a few challenges, including resolving infrastructure bottlenecks, closing the gap between advanced and lagging regions where most of the poor are concentrated, improving its skilled workforce, addressing worsening environmental degradation, natural resource depletion and climate change impacts.

The new ADB country partnership strategy 2018-2022 for India approved in 2017 aims at supporting the country’s rapid economic transformation from lower towards upper middle-income status and achieve a faster, more inclusive, and sustainable growth.

The CPS envisages an enhanced annual lending of $3 billion to $4 billion for 2018-2022, including private sector operations, compared with an average of $2.65 billion per year in 2013-2017, subject to resource availability and project readiness.

The ADB had in 2017 approved a total of 12 projects for India totaling $2.2 billion in areas such as transport, energy, urban, agriculture and natural resources and skills sectors, Zhang said, adding that the bank approved non-sovereign projects amounting to $460 million in 2017.

Meanwhile, Asia’s soaring levels of debt will weigh on growth over the next decade—especially in China, Malaysia, Thailand and India—but it won’t be enough to derail the region’s economy.

That’s because of mitigating factors such as high domestic savings and resilient supply side dynamics, according to Priyanka Kishore, lead Asia economist at Oxford Economics Ltd. in Singapore, Bloomberg reported.

“These should act as substantial buffers,” Kishore wrote in a note. “Even with growth slowing to 3.5% by 2030 (from around 5% currently), we expect Asia to remain the largest contributor to global growth in the long run.”

Oxford forecasts that in the long run, the debt of households and non-financial companies will remain above 100% of gross domestic product in most Asian economies, excluding Japan.

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