The Asian Development Bank (ADB) has adjusted India’s growth outlook for the current fiscal year, reducing it to 6.3 percent from its previous estimate of 6.4 percent. This revision is due to slowing exports and the potential negative impact of unpredictable rainfall on agricultural production.
The Indian economy is expected to be primarily driven by robust domestic consumption and increased investment, including substantial government capital spending, for the remainder of this fiscal year and the next. According to the Asian Development Outlook for September 2023, consumer confidence is on the rise, and these factors are expected to support growth.
ADB explained, “Given the potential challenges posed by declining exports and the uncertain rainfall patterns caused by a developing El Niño, the growth projection for FY2023 has been slightly lowered to 6.3 percent.” The erratic weather patterns, including floods in some regions and inadequate rainfall, especially in August, have affected agriculture. This has resulted in damage to rice crops and reduced sowing for pulses during the kharif season. Consequently, ADB has reduced its expectations for farm sector growth by nearly one percentage point.