The economy is likely to grow by 8.3 per cent in the current fiscal, as against an estimated 7.2 per cent in 2009-10, riding on revival in industrial growth and private consumption, says a report by a UN body.
The report titled 'The economic and social survey of Asia and the Pacific 2010' and released by the UN Economic and Social Commission for Asia and the Pacific in New Delhi on Thursday, said food inflation, high deficit and large portfolio capital inflows are matters of concern, but still it suggested governments in the Asia-Pacific region to up social spending to turn the fledgling rebound into sustainable recovery.
"With a revival in investment and private consumption, growth in exports and a strong expansion in industrial production in the recent months, GDP growth is projected to accelerate to 8.3 per cent in 2010," the report said.
The growth outlook is higher than the Reserve Bank's projection of 8 per cent but at the lower end of the finance ministry's forecast of 8.25-8.75 per cent.
The Escap report said in the Asia-Pacific region the developing economies would grow by 7 per cent in 2010-11, led by China and India growing at 9.5 per cent and 8.3 per cent, respectively.
"Governments must embrace this opportunity to secure the gains of the economic rebound by investing in social programmes that directly benefit those hit hardest by still lingering global crisis," the report said.
While cautioning that the surging food prices is a cause of concern for India, the report said retail price inflation will fall to 7.5 per cent in 2010 from 12 per cent last year. Consumer prices in India, particularly of food, have "remained stubbornly high", it noted. The consumer price index (for industrial workers) rose to about 9 per cent in 2008 and further climbed to 12 per cent in 2009, it said. "A faster increase in food prices has become a cause of concern," the agency said in the report.
The report expressed concern over high deficits in some South Asian countries where governments used expansionary policies to counter the impact of the global slowdown. "It is important that governments in the subregion prepare a clear roadmap for fiscal consolidation to be implemented at the earliest to contain growing public debt."
The survey added, "Yet another challenge is to manage portfolio capital inflows, mainly by FIIs that are leading to build-up of bubbles in capital markets and putting upward pressure on the exchange rates."
It took note of the BSE index appreciating by over 100 per cent between during March-December 2009 as the FII inflows returned to the capital markets and the rupee rallying by around 6 per cent in 2009.
