In a boost for Prime Minister Narendra Modi's 2019 General Elections preparations, the Asian Development Bank (ADB) today said India's two-year trend of declining growth will reverse in the Financial Year 2018.
In a boost for Prime Minister Narendra Modi’s 2019 General Elections preparations, the Asian Development Bank (ADB) today said India’s two-year trend of declining growth will reverse in the Financial Year 2018. The Asian Development Outlook (ADO) 2018 report says Indian economy will expand by 7.3% in FY 2018. This will be followed by a 7.6% growth in FY 2019.
Declining growth in the last two years had provided the opposition talking point to take on the Modi government, which came to power in 2014 promising “achche din”. As per ADB, the growth rate of India will be higher than China in FY 2018. Not just this, while India’s growth will go up in the next financial year, China’s growth is predicted to decline.
The report says Chinese economy would expand by 6.6% in FY 2018 and by 6.4% in 2019. “Expansion in China should moderate to 6.6 per cent in 2018 and 6.4 per cent in 2019 as economic policy leans further toward financial stability and a more sustainable growth trajectory,” the ADB said.
China has set its GDP target at around 6.5% for FY 2018.
Some of the policy decisions by Modi government have been blamed by the opposition as the reasons behind declining growth and job creation rates. These include demonetisation decision and GST rollout.
The ADB report noted that India’s growth rate dip to 6.6 per cent in FY 17 was “driven in part by the lingering effect of demonetisation”. The sudden withdrawal of old Rs 500 and Rs 1000 currency notes had severely impacted the informal sector in the first half of last financial year.
The growth rate was also affected by “teething issues related to the implementation of Goods and Services Tax”, ADB said.
ADB chief economist Yasuyuki Sawada said, “Despite the short-term costs, the benefits of reform—such as the recently implemented GST—will propel India’s future growth.”
Economy and jobs would be two big issues on which Modi will be tested in 2019 elections.
In the wake of demonetisation decision in 2016, the opposition had predicted the GDP growth would decline by two per cent. Around 1.5 years after demonetisation, the economy, however, now looks set to move on a high-growth trajectory once again. Modi won’t expect for a better news in an election year.