India’s economy will expand at a slower rate of 8.2% in 2011-12 pulled down by moderate external demand, tighter fiscal and monetary policies amid a rising spectre of high oil prices, the Asian Development Bank (ADB) said on Wednesday.
“India will record the second-highest growth among Asia’s major developing economies in 2011-12, after China” said Rana Hasan, principal economist, ADB."Oil prices remain a concern. We expect crude oil prices to be on average $104 to the barrel in 2011-12," he said.
India’s gross domestic product (GDP) is projected to grow by 8.6% in 2010-11 signalling a smart turnaround in the world’s second-fastest growing major economy.
ADB’s flagship annual economic publication Asian Development Outlook 2011 released on Wednesday projected India’s GDP grow by 8.8% in 2012-13 as investment and overall economic activity pick up and as planned reforms move forward.
Continued inflationary pressure, a pullback in private investment and structural obstacles are the major challenges confronting India’s policy makers.
Fiscal and monetary policies will also remain less accommodating than in the past as the government follows its fiscal consolidation road map and the Reserve Bank of India acts to anchor inflation expectations, ADB said.
Inflation for February rose to 8.31% up from 8.23% in January.
The RBI has raised key policy rates eight times since April 2010 to cool prices.