ADB cuts FY14 GDP growth forecast to 4.7%

India's GDP grew at 4.4% in the quarter ended June this year

Asian Development Bank (ADB) on Wednesday cut the country’s economic growth forecast for 2013-14 to 4.7 per cent, way below its earlier projection of six per cent.

“With the GDP in the first quarter of FY14 expanding at its slowest pace since the global financial crisis, ADB revised down its growth forecast,” the bank said in the Asian Development Outlook report.

India’s GDP grew at 4.4 per cent in the quarter ended June this year, the lowest pace of expansion since the fourth quarter of 2008-09.

The multi-lateral agency said the Indian economy has been under pressure with the recent depreciation of the rupee and capital outflows, adding to structural constraints, which is making it difficult for the economy to return to a high growth path.

The Prime Minister's Economic Advisory Council (PMAEC) in its Economic Outlook report had cut GDP growth projection to 5.4 per cent for FY14 from its earlier estimate of 6.4 per cent. However, many brokerages firms and banks had forecast the GDP growth below five per cent for the current financial year. But Economic Affairs Secretary Arvind Mayaram had on Tuesday said analysts would revise upwards their projections for economic growth, as they had scaled down their forecast for the current account deficit. In FY13, India’s GDP grew at a decadal low of five per cent.

The report particularly appreciated the government’s move to form a Cabinet Committee on Investments to fast-track stuck projects costing at least Rs 1,000 crore. “Our bright spot is the recent effort at expediting regulatory clearance for several large projects in key infrastructure sectors,” the bank added.

ABD said the next government may help give “fresh impetus to resolve structural problems”.