New Delhi, Mar 27: The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) today projected India's GDP growth at nine per cent for fiscal 2007-08, buoyed by strong savings and investment ratios and consequential increase in productive capacities. The Report projects inflation rate at five per cent in 2008, while warning that high international commodity prices, especially those of food items, would impact adversely on the price situation. It commends India for its robust trade performance with exports and imports growing at a smart rate.
The survey expects foreign inflows to remain positive, thanks to the Indian economy's strong fundamentals, greater investor confidence and sufficient global liquidity. "A slowdown in the United States economy will not affect the Indian economy significantly in a negative manner as it is still largely domestically driven, unlike some other economies which are highly integrated with the global economy and are export-led," Mr Ravi Ramayake, author of the Report told a news conference here.
The event was also addressed by Ms Noeleen Heyzer, Under- Secretary General of the United Nations and Executive Secretary of ESCAP. The report was released by Commerce and Industry Minister Kamal Nath. It launched in India as part of the global release.
The survey says sustained expansion of the Indian economy would see growth at between 8.5 and 9.5 per cent over the medium term, following growth of 8.7 per cent in 2007. The main drivers of the growth have been industrial and services sectors which compensated for a slowdown of the agricultural sector. The survey, however, says there are concerns over India sustaining the high level of growth. There are also doubts on the growth process relating to the strains that are surfacing due to lack of availability of trained labour force and capital stock as well as instabilities arising from inflationary pressures.
"India can achieve and sustain a ten per cent growth rate by improving its business environment and developing physical and infrastructure and human capital, the Report says. Underlying the price pressures were high food prices as well as demand- supply gaps in the domestic production of major food staples and oil seeds amid rising global prices.
The survey warns that the South Asian regions performance could be affected by high oil and food prices. Thus growth rates may be hit, while putting pressure on budgets, inflation rates and balance of payments.