Painting a rosy picture, the Asian Development Bank on Tuesday forecast that the Indian economy would grow by 6.0 per cent in 2003 and 6.3 per cent in 2004, and said fiscal deficit of the Centre and states would start falling after the elections next year.

"India leads the sub-regional growth with its GDP outlook for 2003 and 2004 remaining at 6.0 and 6.3 per cent. Assuming normal monsoon conditions, the economy is projected to grow by 6.0 per cent in 2003 with agriculture and services growing at average rates," ADB said in its outlook for 2003, released in Manila on Tuesday.

Sustained high growth will require higher investments in capacity creation for infrastructure development as well as technology developments for improvements in competitiveness, removal of various rigidities in labour laws and especially, strong fiscal consolidation, it said.

Though ADB warned that the consolidated fiscal deficit of the Centre and states was expected to remain at 9.5 per cent of the GDP, it said strong fiscal consolidation was likely during the post-election phase in the latter half of 2004, leading to decline in consolidated fiscal deficit to 9.0 per cent, it added.