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India cuts GDP forecast, blaming global weakness

India lowered its forecast for economic growth for 2015-16 to 7-7.5 percent

Published: Updated:

India lowered its forecast for economic growth for 2015-16 to 7-7.5 percent in a mid-year review Friday, blaming a weak global economy that has hurt demand for exports.

The government’s earlier forecast said real GDP – which strips out the effect of inflation – would grow by 8.1-8.5 percent for the full financial year ending in March.

But falling demand across the world has led to a steep drop in India’s exports – which in November fell for the 12th straight month, down 24 percent from a year earlier.

Four successive years of drought and an unexpectedly poor monsoon this year have also severely hurt the agriculture sector, on which more than half of India’s 1.2 billion people depend for a living.

“(The forecast of) 8-8.5 percent won’t be realised,” the government’s chief economic adviser Arvind Subramanian told reporters in New Delhi.

“Demand has been much weaker for the future than we had anticipated at the time of the budget,” Subramanian said.

Sharply lower-than-anticipated exports constituted the “big difference” with predictions laid out in the February budget, he said, adding that private investment remained weak.