India on track to grow at 7.4%, developing Asia to improve: ADB

Asian Development Bank on Thursday retained India's growth projection at 7.4 per cent for the current financial year even as it raised the forecast for developing Asian region to 5.9 per cent.

In a supplement to its Asian Development Outlook (ADO) 2017 report, ADB revised the forecast for developing Asia from 5.7 per cent earlier. For 2018, it was raised from 5.7 per cent to 5.8 per cent.

For India, it maintained the growth forecasts at 7.4 per cent for 2017-18 and 7.6 per cent for fiscal 2018-19. Forecasts for India are the same that the multilateral lender had projected in its yearly outlook report which is published in April every year. "Consumption is likely to continue to be the main driver of growth. Higher crop sowing, helped by a healthy monsoon, and an uptick in rural wage growth will bolster rural consumption, while urban consumption will get a boost from pay hikes for central and state government employees," the report highlighted about India. Implementation of the Goods and Services Tax (GST) is expected to improve ease of doing business and facilitate growth in the medium term, it said, adding that there could be some teething pains as firms will take time to adjust to the new indirect tax regime. Front-loading central government capital expenditure should further propel the pickup in growth going further, it said. There was a slowdown in last fiscal due to demonetisation and factors like sluggish private sector investment and weak bank lending contributed to the slowdown, ADB said. However, there are signs of manufacturing activity picking up in the current fiscal with June quarter purchasing managers' index improving to 51.7 from 51.2 in the preceding quarter of last fiscal, the report said. On prices, ADB said: "Inflation in India is now expected to average 4 per cent in FY2017 (2017-18), well below the forecast of 5.2 per cent in ADO 2017, before rising to 4.6 per cent in FY2018 (2018-19)."