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India to grow 7.3% this fiscal, fastest across Asia: ADB

Thursday, April 12, 2018

India's economic growth will rise to 7.3% this fiscal and further to 7.6% in the next financial year, retaining the fastest-growing Asian economy tag, on back of GST and banking reforms.

In its Asian Development Outlook (ADO), 2018, Manila-based ADB said, "risks to trade are high" and retaliatory actions could dent growth in the Asian region going forward.

Indian economy grew 6.6% in the last fiscal as it battled the lingering effects of demonetisation in 2016, businesses adjusting to goods and services tax (GST) in 2017, and a subdued agriculture. The country's economic growth was 7.1% in 2016-17.

With 7.3% growth projected for this fiscal, India would be reversing the two-year declining trend.

"Despite the short-term costs, the benefits of reform such as the recently implemented GST will propel India's future growth," ADB Chief Economist Yasuyuki Sawada said.

Robust foreign direct investment flows attracted by liberalised regulations and the government steps to improve the ease of doing business will further bolster growth, Sawada said.

The ADO said protectionist trade measures by the United States are yet to impact trade flows to and from Asia.

"However, further action and retaliation against it (US trade tariffs) could undermine the business and consumer optimism that underlies the regional outlook (for Asia)," it said.

With regard to China, it said the country will slow down from 6.9% in 2017 to 6.6% this year, and 6.4% in 2019.

"India would remain the fastest-growing country across Asia," ADB India Country Director Kenichi Yokoyama said. However, there are issues regarding rising NPAs and risks from crude oil prices rising above USD 70 a barrel, he said.

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