ADB lowers India’s growth projection for 2013-14 to 4.7%

NEW DELHI, (PNA/IRNA) — Asian Development Bank (ADB) has lowered India’s growth projection for 2013-14 to 4.7 percent from 6 percent earlier saying the recent rupee depreciation and capital outflows could adversely impact the country’s economy.

With gross domestic product in the first quarter of (2013-14) expanding at its slowest pace since the global financial crisis, ADB revised down its growth forecast to 4.7 percent from 6 percent projected in April, it said in its flagship Asian Development Outlook 2013.

The report, presenting a sobering picture of India’s outlook said the country’s economy has been under pressure with recent depreciation in rupee and capital outflows adding to structural constraints which are weighing heavily on its prospects for returning to a high growth path.

In 2014-15 there could be some moderate improvement, with growth estimated at 5.7 percent, but below the previous forecast of 6.5 percent, ADB said.

The recent financial market turbulence is a timely reminder of the need for structural and fiscal reform not just to ensure long-term growth but also to keep financial markets stable in the short-run, PTI reported quoting ADB Chief Economist Changyong Rhee as said.

Earlier last month, the Prime Minister’s Economic Advisory Council (PMEAC) lowered the growth forecast for the current fiscal to 5.3 percent from 6.4 percent.

While, RBI has lowered the growth projection for 2013-14 to 5.5 percent from its earlier estimate of 5.7 percent.

Nevertheless, ADB said the Indian government has taken a number of steps to address the financial market concerns to revive growth prospects besides expanding the bilateral swap arrangement with Japan to US$ 50 billion from US$ 15 billion.

The government also indicated its intention to prop up the rupee’s stability by deepening financial markets and easing external financing constraints, it said.Apart from these measures, proper macroeconomic policies should be also continued, the report said.