Indian economy set to grow fastest

New Delhi: India’s growth is expected to accelerate in FY19 to retain the title of the fastest growing major economy, indicated Asian Development Bank (ADB) and apex industry chamber FICCI on Thursday.

India will grow faster than China, with 7.3 per cent growth rate in FY19 and 7.6 per cent in FY20, the Asian Development Bank (ADB) said.

The growth in India will be driven by increased public spending, higher capacity utilisation rate and uptick in private investment, said its supplement to the Asian Development Outlook.

While retaining India’s growth rate for current fiscal and the next, the outlook said that economic growth in China will decelerate to 6.6 per cent in FY19 and further to 6.4 per cent in FY20. China’s growth rate was 6.9 per cent in FY18.

On India, it said: "In sum, the GDP growth forecast for FY19 is maintained at 7.3 per cent. Growth in FY20 is expected to rise to 7.6 per cent as measures taken to strengthen the banking system bolster private investment and as benefits kick in from the goods and services tax. Any further increase in oil prices poses a downside risk to growth.”

“In the H1FY19, the growth rate is expected to benefit from a low base. Other key drivers of growth include an uptick in public consumption, which is typical before elections, and a recovery in exports following shortages of working capital related to GST,” the supplement said.

Meanwhile, FICCI said that Indian growth story continues to be intact with the GDP expected to grow around 7.5 per cent in the current financial year and improve further in the coming years.

The slowing down of the industrial output growth in May and the inching up of the retail inflation in June to 5 per cent are short-term challenges which are being pro-actively acted on by the government and the RBI, and these should not be seen in any way as hurting the signs of revival in the economy significantly, said the apex chamber.

“While the industrial output growth is expected to rebound in the next few months; the rise in inflation is being watched by the RBI closely, and the apex bank and the government will certainly take necessary measures to keep it at the manageable levels,” said Rashesh Shah, President, FICCI.