India's economic growth is set to accelerate in 2010-11 to an estimated 8.2%, although inflationary pressures pose a challenge to policymakers as the nation emerges from the slowdown caused by the global financial crisis, the Asian Development Bank (ADB) said.
The government expects the economy to grow 8.5% in 2010-11 and 9% by 2011-12.
The economy is estimated to have grown 7.2% in the year ended 31 March after expand- ing 6.7% in the previous year.
Manila-based ADB said its forecasts for the two years are based on six key assumptions: monetary and fiscal stimuli will be withdrawn gradually;
Although inflationary pressures are expected to ease in early FY11 after the winter harvest, any increase in domestic fuel prices in line with the recommendations of the Kirit Parikh panel may fuel inflation.
ADB has forecast headline inflation at 5% in FY11 and 5.5% in FY12 as international prices of oil and non-oil commodities edge up.
Inflation based on wholesale prices rose to a 16-month high of 9.89% in February, exceed- ing the 8.5% estimate of the Reserve Bank of India (RBI) for March-end.
With an expected turn- around in global demand, India's exports are projected to gain 16% in FY11 and 12% in FY12. This would bring exports in FY11 to near FY09 levels and in FY12 to just over the $200 billion target set in the government's foreign trade policy, ADB said.
Imports are projected to grow 20% in FY11 and 18% in FY12 as gross domestic product (GDP) growth accelerates and global oil prices harden.
The widening trade deficit is expected to be partly offset by an increase in transfers from non-resident Indians. Overall, the current account deficit is expected to widen marginally to 2% of GDP by FY12.
ADB maintained that while a shift in monetary policy is un- likely to affect food prices, timely policy adjustments in the months ahead can help underpin a return to India's past high growth rates while maintaining relative price stability.
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Wednesday, April 14, 2010
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