India’s growth will pick up in 2018-19 to 7.3%: ADB

India’s economic growth will pick up in 2018-19 to 7.3% on the back of improved rural consumption and a modest rise in private investment while the debilitating effects of demonetisation and Goods and Services Tax (GST) implementation issues dissipate, the Asian Development Bank (ADB) said on Wednesday.

However, the FY19 forecast is a tad lower than 7.4% economic growth that it estimated for India in September last year.

The Central Statistics Office has estimated the economy to have grown at 6.6% in 2017-18 -a two-year-low.

“Farmers should enjoy more purchasing power with an announced budget policy to spur rural incomes with higher food procurement prices, agriculture market reform, crop insurance, and investment in irrigation and logistics. Stronger rural wages augur well for rural consumption, but urban consumption will be less dynamic with only moderate growth in urban wages and employment,” ADB said in its annual Asian Development Outlook.

However, ADB said escalating trade tensions, rising US interest rates and accumulating domestic private debt are key risks to growth recovery in developing Asia, without specifically naming India.

India’s growth is expected to pick up further to 7.6% in 2019-20 as “efforts to strengthen the banking system and continued corporate deleveraging are likely to bolster private investment.”

“Also set to catalyse growth are benefits from the GST as it mitigates geographic fragmentation and adds revenue to the exchequer, as well as further progress on fiscal consolidation and reform to promote FDI,” ADB said.

NEW DELHI: