India's GDP to grow by 6-7%: ADB

India is set to witness a roller-coaster growth in the next three years ranging between 6-7 per cent mainly due to fluctuations in prospects of industry and services sectors, according to the Asian Development Bank.

In its Asian Development Outlook released on Wednesday, ADB said India's growth is expected to be marginally higher at 6.9 per cent in 2005, which would fall to 6.1 per cent in 2006, only to bounce back to 7 per cent in 2007.

The Manila-based multilateral lending agency expects farm sector to grow by a healthy 4.4 per cent in 2005, even as industrial sector is expected to decelerate to 6.7 per cent while services sector is set to witness 7.7 per cent growth.

ADB said the industrial slowdown in 2005 would be mainly due to "cost smoothing" behaviour of firms to tide over the expected cost escalation as reflected in the latest business confidence survey of India's economic think tank NCAER.

This is corroborated by the fact that firms are very upbeat about capacity utilisation but not optimistic about the demand conditions, it said, noting that the survey showed "significant" proportion of firms are willing to accumulate inventories, especially in consumer goods.

"This explains the beginning of a downturn in industrial business cycle in 2005," it said.

In 2006, it said GDP growth is expected to decline to 6.1 per cent due to further deceleration in the growth of industry and services to 5.2 and 7.3 per cent respectively.