On Wednesday, the Asian Development Bank (ADB) maintained its forecast for India’s GDP growth at 7% for the current financial year. The ADB’s projection aligns with that of the International Monetary Fund (IMF), which recently increased its growth forecast for India from 6.8% to 7%. The ADB attributes this growth to a robust performance in the industry sector, particularly driven by manufacturing and construction activities.
IMF’s Revision and Reasons
The IMF has upgraded its growth forecast for India, citing a revival in private consumption, especially in rural areas, as the main reason for the revision. Despite this, both the ADB and IMF forecasts are lower than the Reserve Bank of India’s (RBI) growth projection of 7.2%.
Agricultural and Investment Outlook
The ADB anticipates a rebound in agriculture this financial year, supported by predictions of an above-normal monsoon. Public investment continues to drive strong investment demand. The India Meteorological Department (IMD) forecasts that the southwest monsoon for the June-September period will be above normal at 106% of the benchmark, though it is currently 2.5% below the benchmark.
Investment Trends and Concerns
New investment projects announced in the June quarter decreased by 92% year-on-year, totaling 59,900 crore. This decline extends the downward trend observed in the previous three quarters and raises concerns about the sustainability and strength of the new private capital expenditure cycle. The value of new investment projects is at its lowest since September 2009, as recorded by the Centre for Monitoring Indian Economy (CMIE). The drop in investment is partly attributed to delays in decision-making during the election period, but the overall weakening of the investment cycle is evident.
Multiple-Choice Questions (MCQs):
- What is the current GDP growth forecast for India as projected by the Asian Development Bank (ADB)?
- A) 6.8%
- B) 7%
- C) 7.2%
- D) 6.5%
- Which organization recently raised its GDP growth forecast for India to 7%?
- A) World Bank
- B) Asian Development Bank (ADB)
- C) International Monetary Fund (IMF)
- D) Reserve Bank of India (RBI)
- What has caused the IMF to revise its growth forecast for India upwards?
- A) Increased agricultural output
- B) Revival in private consumption, especially in rural areas
- C) Higher public investment
- D) Strong manufacturing performance
- What is the current projection for the southwest monsoon according to the IMD?
- A) 95% of the benchmark
- B) 106% of the benchmark
- C) 110% of the benchmark
- D) 102% of the benchmark
- By what percentage did new investment projects announced in the June quarter decrease year-on-year?
- A) 82%
- B) 92%
- C) 85%
- D) 90%