ADB sharply cuts India's GDP growth forecast to 6.5 pc for FY20

The Asian Development Bank on Wednesday sharply cut India's growth forecast to 6.5 percent for the current fiscal, weighed down by the GDP growth rate dipping to a six-year low in the first quarter.

"India's growth forecast for the fiscal year 2019 (FY20) is lowered to 6.5 percent after growth slowed markedly to 5 percent in the first quarter, April–June," said the Asian Development Outlook (ADO) 2019 Update.

In its supplement to the ADO in July, the Manila-headquartered multi-lateral funding agency cut the country's GDP growth estimate to 7 percent for 2019-20 on the back of fiscal shortfall concerns.

Abrupt declines in manufacturing and investment reflect uncertainty ahead of general elections, subdued lending by banks and other financial institutions, stress in the rural economy, and a weakening external outlook, it said.

"India is expected to rebound to 7.2 percent growth in fiscal 2020 (FY21) and join most other subregional countries in performing at or near their ADO 2019 growth forecasts for next year," the ADB Outlook said. As per the latest ADO, South Asia's growth momentum has softened.

For the region, the growth forecasts are lowered to 6.2 percent for 2019 and 6.7 percent for 2020, it said.