The World Bank on Tuesday cut GDP growth projections for India by up to three percentage points to 7.6-7.7% for fiscal years 2016-17 and 2017-18 despite 5 rate cuts which failed to spur corporate lending.
Previously, in January this year, India was projected to grow at 7.9% during both these years.
Despite the reduction in forecasts, India would continue to be the fastest growing major economy in the world.
However, the World Bank warned of headwinds the country could face in the next few years.
Monsoons in India would largely determine the growth of the country’s economy as rural consumption has been affected over the last couple of years by lower than expected rainfall.
Credit growth in the corporate sector has been hampered by rising stressed assets in the aviation, steel and infrastructure sectors.
However, efforts made by India to ramp up FDI in various sectors would help bring in much desired investment in manufacturing and service sectors.
The ‘Make in India’ campaign, aimed at spurring FDI, has seen investment pledges worth $45bn as of December 2015.
Source: Business Standard