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TOPIC : UN pegs India's growth at 8.5 pc
A United Nations agency has forecast the Indian economy to grow at 8.5% during the current fiscal, an estimate that appears conservative given the 9.3% growth in the first quarter.
The United Nations Conference on Trade and Development (UNCTAD) has projected the growth figure on the base of the quick official estimates of 9.2% economic growth in 2006-07. The revised figures put out by Central Statistical Organisation had estimated the economic growth at 9.4% for the last fiscal.
"These are just preliminary figures," Nagesh Kumar, director-general of research and information system for developing countries, said after releasing the UNCTAD Trade and Development Report, 2007.
"I am happy that economists have been proved wrong in their estimates of Indian economic growth," he said, pointing to better-than-expected growth in the first quarter of the current fiscal. It also pointed out that Indian and Chinese commodity exchanges are becoming major players in global markets, which are becoming more volatile due to greater participation of investors.
UNCTAD's estimate is similar to RBI's projection of 8.5% economic growth in 2007-08. Kumar said that as per his personal assessment, there is no reason for the Indian economy to grow at less than 9% this fiscal. India's growth story, though quite impressive, lags behind China, which has been witnessing at least 10% growth since 2003. UNCTAD report projected the Chinese economy to grow at 10.5% during the calendar year even on the high base of 10.7% in 2007.
Similar concerns, as in the US, hold for the United Kingdom, where an increasingly restrictive monetary policy and growing private indebtedness threaten to reduce domestic consumption, which had underpinned growth in recent years, the UNCTAD report said. In Germany and Japan, where the acceleration of growth had been stimulated mainly by rapidly rising net exports and a recovery in fixed investment, private domestic demand remains fragile despite rising employment and some success in reducing unemployment.
The main risks for continued global economic expansion comes from the failure to address the current global imbalances, the report said.
The outlook will be rather bleak, if the present slowdown in the US economy deepens, pushing it into a recession and if the main surplus countries, despite appreciation of their currencies, do not initiate much greater expansionary policies based on the domestic demand.
With respect to stimulating demand, some positive developments are under way. In China, economic policy is seeking to invigorate domestic consumption by increasing the incomes of low-wage earners and by improving the social security system, the report said.
The country is also attempting to slowdown investment and some exports, especially those from highly polluting and energy-consuming industries, through taxation and monetary policy, UNCTAD said.
The report has also warned developing countries such as India against rushing into bilateral or regional free trade pacts with rich nations, and advised them to retain options of implementing alternative growth plans.
Developing nations have already ceded their space in WTO framework to decide on their integration with global markets. This space is even more reduced by free trade areas with developed countries, it said.
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TRADE INDIA MAIL
