ADB lowers India's GDP forecast for FY-18 to 6.7%

New Delhi: The Asian Development Bank (ADB) on Wednesday lowered India's GDP forecast for the current fiscal by 0.3 percent to 6.7 percent, attributing it to tepid growth in the first half, demonetisation and transitory challenges of tax sector reforms.

It has also revised downward the gross domestic product (GDP) outlook for next fiscal beginning from March 2018 to 7.3 percent from 7.4 percent mainly due to rising global crude oil prices and soft growth in private sector investment.

"Owing to tepid growth in the first half of 2017-18, the lingering effects of demonetisation in November 2016, transitory challenges of a new tax system, and some risks to agriculture stemming from a spotty monsoon in 2017, the economy is now expected to grow by 6.7 percent, slower than the 7 percent forecast in the (September) Update," ADB said in a supplement to its Asian Development Outlook (ADO) today.

India, the largest economy South Asia, rebounded to 6.3 percent growth in the second quarter ended in September for this fiscal from 5.7 percent in first quarter, reversing 5 consecutive quarters of deceleration.

However, ADO supplement expects growth to pick up in remaining two quarters of 2017-18 as the government is implementing measures to ease compliance with the new Goods and Services Tax (GST) as well as bank recapitalisation.