Asian Development Bank (ADB) projected Moderate Increase in India’s GDP to 7% in 2012-13

The Asian Development Bank (ADB) in its flagship annual publication Asian Development Outlook (ADO) released on 11 April 2012 projected moderate increase in growth rate for India to 7 percent in 2012-13. The ADB stated that strong economic performance would depend on the country’s ability to push reforms agenda and address issues constraining investments. The government however estimated a growth rate of 7.6 per cent for 2012-13 fiscal.

Moderation in the growth of non-oil imports in 2012-13 and improved economic prospects in the advanced countries in 2013-14 is likely to help the current account deficit to improve to 3.3% in 2012-13 and further to 3% in 2013-14.

ADB mentioned in its publication that number of bills and measures to improve India’s investment environment introduced in Parliament are making little progress amidst in the back of insufficient consensus for immediate reforms.

However the ADB mentioned the recent rise in the pace of road construction and clearances for power projects was a positive signal and would likely mark increase levels of investment.

It noted that the slide in growth in 2011-12 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 ADB expected the inflation to continue to dip due to normal monsoons and more stable global commodity prices. The inflation rate on an average is expected to be 7% in 2012-13 and 6.5% the following year.

The longer-term outlook for consumer prices is to depend on structural reforms to improve production and distribution of food, as India’s consumption patterns and incomes change.

India’s GDP was estimated to stand at 7.5 percent in fiscal year 2013-14. India’s growth fell to 6.9 per cent in 2011-12 fiscal from 8.4 percent in 2010-11.