ADB to downgrade growth projection if oil remains costly

Mumbai, Apr 27 (UNI) The Asian Development Bank (ADB) said it would revise down Indian economy's growth projection of 7.6 per cent for this fiscal if international oil prices persist at USD 70 per barrel.

Further, the Manila-based development bank said that surging crude prices were a matter of concern for India and other countries in the region.

An ADB study said that the projection for economic growth in India for this fiscal was based on oil prices at USD 62 a barrel. Hence a USD 10 rise in oil prices mean 1.2 per cent reduction in India's GDP growth, it said.

Even the 7.6 per cent growth rate projection was based on the assumption that investment and consumption will be held back this fiscal because of higher fuel prices which would push up inflation, the study notes.

Apart from that other concerns may be the prediction of a bad monsoon this fiscal. The meteorological department has forecast that rainfall this year could fall short by as much as 7 per cent. But the ADB study does not feel growth will be significantly affected a result since contribution of agriculture to India's overall GDP has substantially shrunk over the years. From over 50 per cent, agriculture today accounts for a little over 21 per cent of the GDP.

It projected Indian economy to grow at 7.6 per cent this fiscal and 7.8 per cent in 2007, slightly below the medium term rate of growth. Indias growth has averaged more than 8 per cent over the past three years driven by broad-based domestic demand and expensive business dynamics.

UNI SN PP NV2054