India may grow faster than expected in next 2 yrs: World Bank

New Delhi, June 7 (PTI) The World Bank Monday said the
Indian economy may grow at more than the projected level of
8-9 per cent in the next two years, but high interest rates,
the rising rupee and lower demand from developed nations could
come in the way.
"India's recovery after the slowdown is well under way.
Growth is projected to recover to 8–9 per cent in the next two
years. The recovery of Indian GDP could be even faster than
what is projected," according to the World Bank South Asia
Economic Update, released on Monday.
The multilateral lending agency noted that rising
interest rates, rupee appreciation and continued low growth in
high-income nations could pose hurdles to the recovery.
India's recovery could also be impacted by volatility in
capital inflows and high inflation.
"Risks to the (economic) outlook come from volatility in
capital inflows, global recovery and inflation shocks," it
noted.
On the back of a strong performance by the manufacturing
sector, the Indian economy expanded by 8.6 per cent in the
first three months of 2010.
India measures its economic growth on a fiscal year
basis, rather than by calendar year as is done by the World
Bank.
The country's economy grew by 7.4 per cent in 2009-10,
compared to 6.7 per cent expansion in the previous fiscal,
when it came under the ripple effect of the global financial
meltdown.
Before 2008-09, the Indian economy grew by nine per cent
in the previous three financial years. The government expects
that the nine per cent growth rate will only resume in
2011-12. In the current fiscal, it projected that the economy
will grow by 8.5 per cent.
With inflation still above 9.5 per cent in April, the RBI
may further tighten money supply, which may result in higher
interest rates.
Meanwhile, the World Bank has estimated that the South
Asian economy will grow by around 7 per cent this year and by
8 per cent in 2011.
"South Asia is poised to grow by about 7 per cent in 2010
and nearly 8 per cent in 2011, thanks to the strong recovery
in India, good performance in Bangladesh, post-conflict bounce
in Sri Lanka, recovery in Pakistan and turnarounds in other
countries, including Afghanistan, Bhutan and Maldives," the
report said. PTI