India’s economic growth will accelerate to 7.4% during 2017-18, and go up further to 7.6% in the next fiscal, as the impact of demonestisation fades and as reforms pick up pace, the Asian Development Bank (ADB) said on Thursday.
With more than 7% growth, ADB said India will continue to outpace China and other nations in Asia.
“The impact of the demonetisation of high-value banknotes is dissipating as the replacement banknotes enter circulation. Stronger consumption and fiscal reforms are also expected to improve business confidence and investment prospects in the country,” said the Asian Development Outlook report.
India recorded a growth rate of 7.1% during 2016-17, notwithstanding the fears that demonetisation of high-value currency notes of Rs 500 and Rs 1,000 in November last year would adversely impact the economic growth.
“In India, the sub-region’s largest economy, growth is expected to pick up to 7.4% in fiscal year (2017-18) and 7.6% in 2018-19, following the 7.1% registered last FY,” it said.
China’s economic growth is projected to slow to 6.5% in 2017 and 6.2% in 2018, down from 6.7% in 2016.
Efforts of the Chinese government to maintain financial and fiscal stability would continue to be a modest drag on growth going forward, it said, adding the continued structural reform would help in maintain growth in the government’s target range.
Over the last few years, India has taken a host of economic reforms initiative, including the Goods and Services Tax (GST) and liberalisation of the FDI regime, with a view to improve business climate and promote growth. The GST is expected to roll out from July.
The report further said that South Asia would remain the fastest growing of all subregions, with growth reaching 7% in 2017 and 7.2% in 2018.
Commenting on the future prospects, it said that in two-thirds of economies in developing Asia, the growth is being supported by higher external demand, rebounding global commodity prices, and domestic reforms, making the region the largest single contributor to global growth at 60%. (With inputs from PTI)