The Asian Development Bank (ADB) has projected a moderate increase in growth rate for India to 7 per cent in 2012-13, saying a strong economic performance would depend on the
country's ability to push reforms agenda and address issues constraining investments.
"The Gross Domestic Product (GDP)
growth should edge up to 7 per cent in 2012-13 and 7.5 per cent in 2013-14, after falling to 6.9 per cent in FY11 from 8.4 per cent the year before," said the ADB's flagship annual publication Asian Development Outlook (ADO).
The government, however, has projected a growth rate of 7.6 per cent for the current financial year and Reserve Bank of India (RBI) is slated to come out with its forecast next week.
"An expected easing in monetary policy after a
long period of persistent inflation and rate hikes might help stimulate investment over the coming year, but its impact is likely to be limited until obstacles like land purchase and environmental regulations, which are currently deterring both domestic and foreign investors, are addressed," said Changyong Rhee, ADB's Chief Economist.
A number of bills and measures to improve India's investment environment have been introduced in Parliament, but they are making little progress amid lack of sufficient consensus for immediate reforms, said ADO.
It further pointed out that the recent rise in the pace of road construction and clearances for power projects is a positive signal, but, "more is needed to substantially increase levels of investment".
As regards 2011-12, the ADO said, the slide in growth reflected falling exports, weaker consumer spending and a slump in investment. Industrial growth dropped to a decade low of 3.9 per cent, although services remained robust, contributing nearly 80 per cent of overall GDP growth for the year.
The bank also sees
China's economic growth to moderate slightly over the next two years but will exceed 8 per cent, on the back of strong investment, rising private consumption and a more stable global economy.
Paul J. Heytens, ADB country director for China, said China's GDP growth in 2012 is forecast at 8.5 per cent, with the priority of macro policy expected to shift from fighting inflation to stabilizing growth.
with inputs from agencies
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