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India’s growth to slow to 5%: ADB - LahoreEstate - 04-01-2009 08:39 AM
HONG KONG: India’s economic growth will drop to five percent this year but the country’s stimulus measures should allow it to rebound to 6.5 percent in 2010, the Asian Development Bank said Tuesday.
The figure is sharply down from 2008, when India’s economy grew by 7.1 percent, the bank said in its annual flagship economic report. While India is not as reliant on exports as other nations in the region that have been battered by the global downturn, the ADB’s acting chief economist Jong-Wha Lee, the country faced the problem of a huge deficit.
“It is imperative that the central government bring down its deficit in the medium term to a manageable level in order to ensure long-term debt sustainability,” he said. “Expansionary fiscal policies could impair the confidence of investors unless clear signals are given that the present large deficits are truly temporary.”
India’s budget deficit was estimated at 6 percent of GDP in the 2008 fiscal year, up from a target of 2.5 percent, the ADB said. But adding in extra items and the deficits run by individual state governments, the actual figure is estimated to bring the national deficit to 10 percent of GDP.
The ADB said the government should review its tax policy and take a close look at public spending to ensure it is focusing on infrastructure projects and social spending that will boost long-term stable growth. India’s economy grew at its slowest pace in nearly six years in the last quarter of 2008. The government has long said that the country needs double-digit growth to lift hundreds of millions of its people out of grinding poverty.
The ADB said that growth in Asia’s developing economies this year would fall to 3.4 percent, down from 6.3 percent last year and 9.5 percent in 2007. afp
http://www.dailytimes.com.pk/default.asp?page=2009\04\01\story_1-4-2009_pg5_24