India's GDP expected to grow at 7.7 % in 2012

Jan 17, 2012 12:00 AM

A United Nations report has pegged India's economic growth at 7.7 % in 2012 and 7.9 % in 2013, against the Indian government's own estimate of an even low 7.0 % growth in the 2012-13 financial year.
The Indian economy will keep a slow pace of growth in the coming years, expanding at 7.7 % in 2012 and by 7.9 % in 2013, according to the UN report on 'World Economic Situation and Prospects 2012'.

"The downside risks to the regional outlook have sharply increased in recent months... particularly in case of India, the report said, adding, ''Double-dip recessions in Europe and the United States would have a significant impact on economic activities across South Asia."
While India's GDP is expected to grow at 7 % in the current fiscal, Planning Commission deputy chairman Montek Singh Ahluwalia said the 2012-13 budget should target an 8 % growth rate in order to improve the growth momentum of the economy.

"We should be aiming at 8 % next year and from then onward, we can build on to a more rapid growth. Most important thing is this regard, in my view, would be a budget that signals a return to fiscal consolidation," Ahluwalia said.
The Indian economy grew at 7.3 % in the first half of this fiscal. This has slipped to a two-year low of 6.9 % in the third quarter of the fiscal.

For South Asia as a whole, which includes India, Pakistan, Nepal, Iran, Bangladesh and Sri Lanka, the UN report has projected a higher growth rate of 6.7 % in 2012 and a 6.9 % growth in 2013, against the 6.5 % growth expected in 2011.
For the world economy, the UN report said, prospects are not so good with a further slowing of US and European economic growth.

The high savings rates and strong domestic demands would help India maintain its current level of growth momentum despite the adverse impact of the slowdown in the US and European economy, according to the UN report.
The report has projected world economic growth at 2.6 % in 2012 against the estimated 2.8 % in 2011 and 4 % in 2010.

The US economic growth is expected to fall to 1.5 % in 2012 against the estimated 1.7 % in 2011 and 3 % in the previous year.
Growth in the European Union will fall to 0.7 % this year as compared to the estimated 1.6 % in 2011, the UN report said.

India and China are expected to remain the main drivers of global economic growth in the coming years.
However, the report has projected a higher fiscal deficit for India than the government's target of 4.7 % in the 2011-12 fiscal. It cited lower tax collections amidst the slowdown as also the government's failure to meet divestment targets was the main reason for the increase in the country's fiscal deficit.

The saving grace for the Indian economy is its job market, which, the report said, has a positive outlook.
"India is enjoying gains in employment rates," it said.

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