India should see a moderate uptick in growth during 2012-13 as global conditions stabilise, but a return to the very strong performance of recent years hinges on moving the reform agenda forward, especially addressing issues that are constraining investment, said a Asian Development Bank report.
ADB’s flagship annual economic publication, Asian Development Outlook 2012 (ADO 2012), released on Wednesday, said gross domestic product growth should edge up to 7% in 2012-13 and 7.5% the year after, after falling to 6.9% in 2011-12 from 8.4% an year before.
The projection assumes that industrialised countries will post growth, monetary policy eases, the budget deficit is cut, and headway is made on long-standing structural and regulatory issues over the next two years.
“An expected easing in monetary policy after persistent inflation and rate hikes might help stimulate investment over the coming year, but its impact is likely to be limited until obstacles like land purchase and environmental regulations, which are currently deterring both domestic and foreign investors, are addressed,” said
Changyong Rhee, ADB’s chief economist.
A number of bills and measures to improve India’s investment environment have been introduced, but they are making little progress.