Mumbai: Asian Development Bank (ADB) lowered India's economic growth forecast for FY2019 to 5.1% on slowing job prospects, rural distress exacerbated by poor harvest and credit crunch.
The multilateral bank, however, expects the growth to pick up to 6.5% next year on supportive government policies.
"In South Asia, India's growth is now seen at a slower 5.1% in fiscal year 2019 as the foundering of a major non-banking financial company in 2018 led to a rise in risk aversion in the financial sector and a credit crunch.
"Also, consumption was affected by slow job growth and rural distress aggravated by a poor harvest. Growth should pick up to 6.5% in fiscal year 2020 with supportive policies," the ADB said in a supplement to the Asian Development Outlook 2019 Update. Earlier in September, it had trimmed India's gross domestic product (GDP) growth to 6.5% from the earlier estimate of 7%. For FY2020, it had projected a GDP growth of 7.2%, which now has been cut to 6.5%.
The Reserve Bank of India last week in its bi-monthly monetary policy review has cut India's GDP forecast to 5% from 6.1% citing weak domestic and external demand.
While the International Monetary Fund (IMF) slashed India's GDP growth projection to 6.1% from 7%, the World Bank lowered its estimate to 6%.
