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India can grow at 8%, says World Bank
Agencies |
November 12, 2003 14:37 IST
India can achieve its target of 8 per cent GDP growth rate during the Tenth Five-Year Plan, said the World Bank on Wednesday.
The bank also said that the Indian economy will grow by 6 to 7 per cent in the current fiscal year on the back of big agricultural growth due to an excellent monsoon, strong economic indicators, rise in manufacturing activity, low interest rates and a stable global economic environment.
The bank, however, said that for India to gallop on the road to high growth, it needed to curb its fiscal deficit, pick up the pace of economic reforms and spend more on infrastructure projects.
World Bank Country Director Micheal F Carter said: "The short-term outlook for India is positive. We will see a strong recovery this year,'' he said on the sidelines of a function organised by the Western International University."
''In the longer term, we see the potential for an even faster growth but for that many steps need to be seriously pursued by the Central and state governments,'' he said.
He, however, said that there was no need for much concern over the government's fiscal deficit (which is at above 5 per cent of the GDP) at this point in time.
''I feel that it will not be much of a problem as with growth, the fiscal deficit is expected to come down in the long run".
''Though the consolidated fiscal deficit of the Centre and the states is above 10 per cent, the Indian economy has higher underlying growth potential. India can live with higher fiscal deficit,'' said Carter.
Higher growth, he said, would ensure that the financial sector too springs back to health.
He, however, pointed out some ''serious impediments'', which needed to be tackled for sustaining the growth momentum.
''These include improving infrastructure, literacy and health. Attention needs to be given to the small and medium enterprises and agriculture," he said.
''Distortions in agriculture need to be addressed and diversification of farm economy encouraged,'' he said.
The encouraging words from the World Bank follow similar forecasts by the Reserve Bank of India, National Council of Applied Economic Research, Confederation of Indian Industry and other economic think tanks.
The World Bank shared its bullishness over the Indian economy with the Reserve Bank of India, the National Council of Applied Economic Research, the Confederation of Indian Industry and other economic think-tanks.