Sunday, November 11, 2001
GDP growth seen at 5.3-5.8%: ADB
NEW DELHI
THE ASIAN Development Bank cut its forecast on Friday for India's economic growth, blaming an uncertain global economy. The Manila-based ADB forecast growth this year for India of between 5.3 and 5.8 per cent, down from an earlier projection in April of 6.2 per cent. The forecast indicates India will still be one of the world's fastest-growing economies. The bank said an improvement in industry and services sector growth would boost India's GDP growth rate for 2002 to between 6.1-6.5 per cent. It said the current account deficit may be below one percent of GDP in 2001 due to subdued export and import growth following the impact on the global economy of the devastating September 11 attacks on New York and Washington. Next year, the bank said India's GDP growth would be boosted by a revival in agricultural growth which in turn would be accompanied by a moderate improvement in industry and the services sector in the second half. The Indian economy has been hit by a bad demand slowdown which has pulled down GDP growth and led to a slump in industrial production output. Industrial production growth slid to 2.2 per cent between April and August from 5.6 per cent in the year-earlier period. GDP growth fell to 5.2 per cent in 2000/01 from 6.4 per cent a year earlier. But it said achieving the high-end forecast for 2002 would depend on how much the world economy improves as well as India's ability to push through key structural reforms and ensure fiscal discipline. The bank said inflationary pressures might be managed effectively due to better fiscal discipline. "Under this assumption, inflation would stay moderate at around 5.0 percent," it said. The annual inflation rate as measured by the wholesale price index -- the key guide to inflation in India -- fell to its lowest level this year to 2.72 per cent during the week ended October 20 and analysts expect it to remain low in the months ahead. The bank, however, cautioned that an improved fiscal position was a precondition for stronger and more sustainable growth. "Fiscal discipline is crucial for investor confidence and for sustaining growth in the private sector," it said. India's fiscal deficit widened in the first six months of this financial year due to sluggish revenue receipts -- a fallout of the economic downturn -- and analysts say it would be an uphill task for the government to keep it within the targeted level of 4.7 per cent of GDP. India has consistently failed to meet its fiscal deficit targets in the past and economists say that is one of the biggest factors restraining the economy from achieving its potential. ( REUTERS )
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