ADB predicts India to grow fastest in Asia at 7.3%

New Delhi, April 11: India’s economic growth will rise to 7.3 per cent this fiscal and further to 7.6 per cent in the next financial year, retaining the fastest- growing Asian economy tag, on back of GST and banking reforms.

In its Asian Development Outlook, 2018, ADB said, “risks to trade are high” and retaliatory actions could dent growth in the Asian region going forward.

Indian economy grew 6.6 per cent in the last fiscal as it battled the lingering effects of demonetisation in 2016, businesses adjusting to GST in 2017, and a subdued agriculture.

The country’s economic growth was 7.1 per cent in 2016- 17.

With 7.3 per cent 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 GST will propel India’s future growth,” ADB chief economist Yasuyuki Sawada said on Wednesday.

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

The report said protectionist trade measures by the US 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 per cent in 2017 to 6.6 per cent this year, and 6.4 per cent 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 $ 70 a barrel, he said.

He, further, said the impact of the US tariff hikes may not be much, but India “need to be cautious”.