Supported by a healthy monsoon and new investments, the Asian Development Bank (ADB) has retained its India economic growth forecast for 2015-16 at 7.8 per cent.
ADB had projected this growth figure in March this year in its flagship publication ‘Asian Development Outlook’ (ADO).
For 2016-17, the growth forecast remains unchanged at 8.2 per cent with expectations of strong services sector growth bolstering overall performance.
In its ADO update released on Thursday, the Manila-headquartered development bank has, however, cautioned that risks to growth prospects could emerge from further delay in passing some legislations crucial to easing land acquisition for industry and implementing an uniform goods and services tax (GST).
The update said that underlying indicators suggest that India is on track to achieve the growth forecast of 7.8 per cent in 2015-16.
“A healthy monsoon extending to early July has seen summer crop sowing increase 57.6 per cent over the last year and is expected to boost growth in agriculture.
“The number of new investment projects announced has continued to increase for the fourth consecutive quarter during the quarter ended June 2015, indicating better investment sentiment,” the update said.
Also, the improvements in indirect tax collections in the first quarter of the current fiscal points to some recovery in manufacturing, the report added.
Dip in China forecast While India’s growth forecast has been retained, the ADO has, however, lowered the growth projection for China to 7 per cent for 2015, from the earlier 7.2 per cent. The Chinese economy is projected to decelerate to 6.8 per cent in 2016.
For the entire developing Asia, the ADO update has cut the 2015 growth forecast to 6.1 per cent from 6.3 per cent. This has been done in view of slower-than-expected economic activity in the US and China.
However, South Asia as a whole is now expected to grow 7.3 per cent in 2015, up slightly from 7.2 per cent seen earlier.