The Paris-based think tank noted that India’s growth slowed to a more sustainable pace towards the end of 2010, after strong post-crisis rebound driven by a surge in private investment
London: Paris-based think tank the Organisation for Economic Cooperation and Development (OECD) on Wednesday pegged India’s growth at 8.5% for the current fiscal, indicating that economic expansion would be slower, reports PTI.
The OECD has projected the Indian economy to expand 8.5% in 2011-12, much lower than the growth of 8.6% witnessed in 2010-11 financial year.
Recently, finance minister Pranab Mukherjee had said the Indian economy is expected to grow 8% in 2011-12, which is lower than budgetary estimate of 9% growth.
The Reserve Bank of India (RBI) has pegged GDP growth at 8%, citing high oil prices among other things as the reason for this moderation.
OECD said in 2012-13, the economy is projected to expand 8.6%.
OECD, a grouping of 34 developed and developing nations, noted that India’s growth slowed to a more sustainable pace towards the end of 2010, after strong post-crisis rebound driven by a surge in private investment.
“Going forward, growth will pick up somewhat, underpinned by buoyant corporate sentiment and demand for infrastructure spending,” the think-tank said.
Pointing out that inflationary pressures have become more generalised due to rising non-food prices, OECD said that liberalisation of foreign direct investment (FDI) in retail sector would help in easing pressures of food inflation.
“... liberalisation of FDI in the retail sector would promote competition and help modernise supply chains, thereby reducing food inflation pressures,” it added.
Food inflation, which was in double digits for most of 2010, stood at 7.47% for the week ended 7th May. Meanwhile, headline inflation has been above 8% since January last year and touched 8.66% in April 2011.
The government is likely to take a decision soon on FDI in multi-brand retail. Presently, FDI is allowed only in single brand retail, which is capped at 51%.
“The recent increase in world oil prices has been passed through into domestic petroleum product prices only to a limited extent and higher energy subsidy outlays are likely in 2011,” OECD said.
Revenue secretary Sunil Mitra said yesterday that “inflation can affect domestic demand and thereby adversely affect GDP growth... and consequently our tax collection”.
“A renewed commitment to reducing subsidies is needed to lower the burden on public finances. Efforts to better target subsidies on the needy ought to be stepped up,” OECD added.
The Survey of Professional Forecasters on Macroeconomic Indicators expects the year-end inflation to be in the range of 7% to 7.9%, which is much above the RBI’s projection of 6% by March 2012
Mumbai: A survey sponsored by the Reserve Bank of India (RBI) does not see any dramatic fall in inflation during the course of the year, although it pegged the economic growth rate for 2011-12 at 8.2%, nearly the same as projected by the central bank, reports PTI.
The Survey of Professional Forecasters on Macroeconomic Indicators expects the year-end inflation to be in the range of 7% to 7.9%, which is much above the RBI’s projection of 6% by March 2012.
Forecasters were asked to assign probabilities to various macro-economic indicators linked to the Indian economy.
“Forecasters have assigned the highest (30.2%) chance that it (wholesale price inflation) will fall in 7%-7.9% at end-March of 2011-12,’ the survey said.
RBI’s projection for wholesale price index (WPI) inflation for March 2012 was 6% with an upward bias, keeping in view the domestic demand-supply balance, the global trend in commodity prices, and the likely demand scenario.
Headline inflation stood at 8.66% in April, on the back of moderation in the prices of certain food items, in line with the government’s expectations.
Inflation has been above 8% since January 2010.
The apex bank has already hiked policy rates nine times since March 2010 to tame demand and curb inflation.
Besides, the survey pegged India’s economic growth at 8.2% in the current fiscal.
“For 2011-12, forecasters have revised their real GDP (gross domestic product) forecast downwards to 8.2% from 8.5% as per the last survey,” the survey said.
The RBI in its annual credit policy review had projected the Indian economy to grow 8% in financial year 2011-12, as it is facing downside risks from the sovereign debt crisis in the euro-zone nations and high oil prices.