The Asian Development Bank on Monday projected that Indian economy was poised to grow by 6 per cent this year, marginally better than South Asia's growth of 5.7 per cent, mainly due to robust growth in services sector and assuming that the monsoon would be normal.
Citing the recent Severe Acute Respiratory Syndrome epidemic, the Manila-based bank, however, said there could be 'substantial negative impact' on several economies of the Asian region.
ADB also said India, which accounts for three-fourth of the South Asian economy, was expected to grow by 6.3 per cent in 2004, again marginally higher than the sub-region's average of 6.1 per cent.
"Assuming normal monsoon conditions, the Indian economy is projected to grow by 6 per cent in 2003 with agriculture and services growing at average rates," ADB assistant chief economist Jean-Pierre A Verbiest said in New Delhi.
Releasing the ADB's 'Outlook 2003', he said the services sector was expected to grow by 7.1 per cent, manufacturing by 6.1 per cent and agriculture would post normal 'positive' growth.
In the medium to long term, sustained high growth would require highest investment in capacity creation for the infrastructure development as well as technology development for improvement in competitiveness, removing rigidities in labour laws and strong fiscal consolidation.
Taking note of the combined fiscal deficit of the Centre and the states, which was expected to be 9.5 per cent of gross domestic product, the bank said strong fiscal consolidation was expected after elections in the latter half of 2004 for axing the consolidated fiscal deficit to 9 per cent.
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