India cuts GDP forecast, blaming global weakness

Falling world demand leads to sharp drop in exports

NEW DELHI, Dec 18, (AFP): India lowered its forecast for economic growth for 2015-16 to 7-7.5 percent in a mid-year review Friday, blaming a weak global economy that has hurt demand for exports.

The government’s earlier forecast said real GDP -- which strips out the effect of inflation -- would grow by 8.1-8.5 percent for the full financial year ending in March.

But falling demand across the world has led to a steep drop in India’s exports -which in November fell for the 12th straight month, down 24 percent from a year earlier.

Four successive years of drought and an unexpectedly poor monsoon this year have also severely hurt the agriculture sector, on which more than half of India’s 1.2 billion people depend for a living.

“(The forecast of) 8-8.5 percent won’t be realised,” the government’s chief economic adviser Arvind Subramanian told reporters in New Delhi.

“Demand has been much weaker for the future than we had anticipated at the time of the budget,” Subramanian said.

Sharply lower-than-anticipated exports constituted the “big difference” with predictions laid out in the February budget, he said, adding that private investment remained weak. Net energy importer India received a windfall from a steep drop in oil prices this year, but even if crude prices remain at current levels, the benefits next year will be less pronounced, he said.

Asia’s third-largest economy expanded 7.4 percent in the second quarter of the financial year, figures released at the end of November showed, outperforming China and making it the world’s fastestgrowing major economy.

India economy grew by 7.4 percent yearon-year in the last quarter, official figures showed Monday, outperforming China and giving Prime Minister Narendra Modi a boost following a recent election drubbing.

Growth in the three months to the end of September quickened to 7.4 from 7.0 percent in the previous quarter, according to statistics ministry data, slightly ahead of analysts expectations.