The Asian Development Bank on Wednesday slashed its projection for India’s economic growth in the ongoing fiscal year from 7% to 6.5%, but said the economy will remain one of the fastest-growing in the world this year as well as the next.

The revised projection came after India reported its slowest growth in Gross Domestic Product in over six years during the first quarter of 2019-’20. The growth rate in April-June was 5%. In the last few months, core sectors such as automobiles and manufacturing have slowed down gradually due to weakened consumer demand and dearth of investments.

The latest projection was made in an update to the Asian Development Outlook that was last released in July. The report said that the slow growth in April-June was due to slower growth in consumption and investment, which hit the manufacturing and service sectors. However, the economy is likely to pick up in 2020-’21, growing by 7.2%, due to “proactive policy interventions along with a recovery in domestic demand and investments”, the report said.

The projection for 2020-’21 is the same as the one made in July.

“India will remain as one of the fastest-growing economies in the world this year and next year as the government continues to implement policy reforms and interventions to strengthen economic fundamentals,” said Yasuyuki Sawada, the chief economist of Asian Development Bank.

The reductions in corporate tax rates, announced by the government on September 20, will uplift private investment, including foreign direct investments, and enhance India’s global competitiveness, the funding body said. The financial sector will receive a boost from recapitalisation of banks and support measures for non-banking financial companies, and lower interest rates, it added.

However, the weak global economy will keep risks “tilted to the downside”, according to the update.

Bangladesh is likely to be the fastest growing economy in Asia in the ongoing fiscal year, with growth expected to be 8%, the ADB said.

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