INSUBCONTINENT EXCLUSIVE:
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.The economy grew 6.6 per cent in the last fiscal as it battled the
lingering effects of demonetisation in 2016, businesses adjusting to Goods and Services Tax (GST) in 2017, and a subdued agriculture.The
ADB's growth projection of 7.3 per cent this fiscal is in line with that of rating agency Fitch, but a tad lower than RBI's forecast of 7.4
per cent.In its Asian Development Outlook, 2018, Manila-based ADB said the growth will pick up as the new tax regime improves productivity
and as banking reform and corporate deleveraging take hold to reverse a downtrend in investment
"In sum, growth is forecast to pick up to 7.3 per cent in FY2018 on improved rural consumption, a modest uptick in private investment, and
less drag from net exports
Urban consumption growth will remain stable, and impetus from public investment modest," it said.Growth is expected to pick up further to
7.6 per cent in FY2019 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," it said.The Asian Development Outlook (ADO) said
the prospects for policy stimulus remain limited and there is risk of tight interest rate regime."The deferment of fiscal consolidation,
upside risks to inflation, and expected hikes in US interest rates in 2018 squeeze maneuvering room for policy rate cuts to stimulate growth
At the same time, the odds of a rate hike are low with the central bank indicating tolerance for slightly higher inflation and recognition
of the need to nurture recovery
Consequently, the status quo is likely to hold in FY2018, albeit with some risk of monetary tightening," it said.It projected inflation to
average 4.6 per cent in FY2018 (2018-19), rising to 5.0 per cent in FY2019 with further firming of global commodity prices and strengthening
