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Last Modified: Thu, Mar 31 2016. 01 18 AM IST

Indias economic growth seen slowing to

7.4% in 2016-17
GDP growth will fall to 7.4% from 7.6% in 15-16; tepid external demand is offsetting pickup in
domestic demand

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Asit Ranjan Mishra

ADB says the weak balance sheets of public sector banks will hamper lending and growth
prospects. Photo: AFP

New Delhi: Indias economic growth will slow to 7.4% in 2016-17, from 7.6% in 2015-16, with
tepid external demand offsetting the pickup in domestic demand, Asian Development Bank
(ADB) said on Wednesday.

In its annual Asian Development Outlook 2016 report, ADB said:GDP (gross domestic product)
growth in India is expected to dip marginally this year as expansion in public investment
weakens underfiscal
constraints, private corporations continue to deleverage,and
external
demand remains anaemic. Moreover, the weak balance sheets of public sector banks will hamper
lending and growth prospects.

The Economic Survey pegged the economys growth at 7-7.75% in 2016-17, indicating a greater
chance of deceleration from the previous years GDP estimate of 7.6%.

The slowdown in advanced economies, including US, lower commodity prices and weaker
currencies in some major trading partners, vis--vis the Indian rupee, are likely to hit
merchandise exports and financial, telecom, business and other tradable services.

Lower net exports could thus impinge on growth, ADB said.

ADB projected growth to pick up to 7.8% in 2017-18, helped by the governments

strengthening of public sector banks capital and operations, private investment benefiting from
corporate deleveraging, the financing of stalled projects, and an uptick in bank credit.

ADB chief economist Shang-Jin Wei said India will remain the fastest growing large economy in
the world in the near term. The potential growth of the country can be raised further if it can
successfully implement necessary reforms including unifying the tax regime, improving the
labour market regulations, as well as opening up further to foreign direct investment and trade,
Wei said.