This comes at a time when the Gross Domestic Product (GDP) estimate has been revised downward by the Asian Development Bank (ADB) and Organisation of Economic Cooperation and Development (OECD).
The report named ‘South Asia Economic Focus, Fall 2019: Making (De)centralisation Work’ said: “In India, after the broad-based deceleration in the first quarters of this fiscal year, growth is projected to fall to 6.0 percent this fiscal year.”
However, it said that in the fiscal year 2020 the growth is expected to gradually recover to 6.9 percent and in the following year to 7.2 percent.
The current forecast for the country for this fiscal year is even lower than that of Nepal and Bangladesh which is estimated to grow at 6.5 percent and 7.2 percent respectively.
“The remarkable weakness of Indian economic activity during the first half of 2019 is largely driven by external and cyclical factors. However, during this downturn several structural problems have come to the surface,” the report said.
“One of these problems is related to vulnerabilities in the financial markets that have constrained credit supply that financial sector reforms are needed to bring India back to a rapid growth path,” the report added.