The Asian Development Bank (ADB) on Thursday revised downwards its outlook for India's GDP growth for the financial year 2019-20 to 7 per cent from its previous forecast of 7.2 per cent due to shortfall in the previous fiscal.
However, the Manila-based bank in its supplement to the Asian Development Outlook (ADO) released on Thursday said that the growth may improve in FY 2020-21 to 7.2 per cent.
"The GDP growth forecast for FY2019 is revised down from the ADO 2019 forecast of 7.2 per cent to 7.0 per cent, mainly reflecting the unexpectedly weak FY2018 outturn," the ADB said.
"Growth is expected to inch up again to 7.2 per cent in FY2020-21, helped by recent reforms to improve the business climate, strengthen banks and relieve agrarian distress," it added.
The revised forecast is in line with the Reserve Bank of India's revision, which was announced in June. The Economic Survey 2019-20 released on July 4 also pegged the growth estimate at 7 per cent.
GDP growth in India in the fourth quarter of fiscal year 2018-29 declined to 5.8 per cent year-on-year, down more sharply than expected from 6.6 per cent in the prior quarter and the lowest in five years.
"The slowdown was broad-based, with private consumption and investment growth slowing from previous quarters. On the supply side, agriculture and manufacturing grew more slowly as services picked up a bit," the ADB said.
On the impact of the US decision to end preferential trade treatment for India under its Generalised System of Preferences, the ADB report said that it will have minimal effect as it benefited only 1.8 per cent of all Indian exports.
"Agriculture is expected to grow at a healthy rate in FY2019 as current weather trends indicate a normal monsoon. Moderation in growth prospects for the advanced economies could adversely affect tradable services, this drag on growth mitigated by a more competitive currency and benign oil prices," the ADB said.