Brushing aside the projections of moderation in growth, the UN-ESCAP said on Thursday the Indian economy would grow by nine per cent in the next financial year (2008-09).
"India's economy has entered into a 'new phase of high growth', with expansion of nine per cent forecast for 2008, buoyed by investment and savings amid increasing productive capacity," UN Economic and Social Commission for Asia and the Pacific (UN-ESCAP) survey released in New Delhi on Thursday said.
Indian economy is expected to grow by 8.7 per cent during 2007-08 and many think-tanks expect moderation in growth in the coming fiscal.
While the Prime Minister's Economic Advisory Council Chairman C Rangarajan has projected a growth rate of 8.5 per cent in 2008-09, the UK-based magazine Economist expects the gross domestic product to moderate to 7.8 per cent.
The survey, which was released by Commerce and Industry Minister Kamal Nath, also said, "India could achieve and sustain a 10 per cent growth rate by further improving the country's business environment, by developing its physical infrastructure and human capital".
Pointing out that main drivers of the growth would be industrial and services sectors, the survey said in the medium-term India could see economic growth between 8.5 to 9.5 per cent.
The survey further said that slowdown in the agriculture sector would be compensated by higher growth in industry and services.
Referring to the concerns over sustaining high growth, it said the growth could be strained on account of factors like availability of labour, capital stock and inflationary instabilities.
Pointing out that inflation rate in India is expected to moderate to 5 per cent during 2008-09 from 5.5 per cent in 2007, the UN-ESCAP survey warned, "(inflationary) pressures could persist as international commodity prices, especially oil and food prices, are high".
In addition, it said, demand-supply gaps in the domestic production of major food items and oil seeds would continue to put pressure on prices.
"Should oil and food prices remain very high, they will compromise economic growth while putting pressure on Budget, inflation rates and the balance of payments in countries throughout the sub-region (Asia-Pacific)," the survey added.
Bullish on India's trade performance, UN-ESCAP expected the exports and imports to grow strongly. "For 2007 alone, both exports and imports are estimated to have grown by more than 20 per cent," it said.
The survey also suggested that Indian government should continue efforts to "contain wasteful spending and orient it towards priority sector" for promoting economic growth.
It said the demand for public spending remains high due to widespread poverty, warning that public debt continues to remain a "serious problem".
Further, the survey said increase in agriculture productivity would reduce poverty and highly benefit the emerging economies of India and China.
"Large gains in poverty are also possible through comprehensive liberalisation of global agricultural trade, which could lift a further 48-51 million people out of poverty in the region," it said.
© 2025