ADB cuts India's growth forecast to 5.6 pc

October 03, 2012 12:04

Just In: The Asian Development Bank has cut India's growth forecast to 5.6 per cent for this fiscal, from 7 per cent projected earlier.

According to the ADB, falling global demand and a delayed monsoon curtailing agricultural growth have exacerbated India's recent economic slowdown, and have led to reduced growth forecasts for fiscal years 2012 and 2013.

"India can start reversing this trend by improving its investment climate and expediting reforms," said ADB Chief Economist Changyong Rhee.

"Tight monetary policy to counter persistently high inflation and a high deficit leave little room for policy to stimulate growth. However, restoring investor confidence can help jumpstart critical infrastructure projects that could get the economy moving."

The report raises projected inflation to 8.2% in FY2012 (from 7.0%) on the back of higher domestic food and fuel prices. Inflation is then expected to trend downwards to 7.0% in FY2013.

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