India’s economy is set to expand by 8.5 per cent in the current fiscal year (2010-11) but persistently high inflation and a rising rupee could undermine future strong growth, the Asian Development Bank (ADB) forecast in a latest report.
The Asian Development Outlook 2010 Update (ADO Update), released on Tuesday, raised its GDP (gross domestic product) growth figure for 2010-11 to 8.5 per cent from its April projection of 8.2 per cent, while retaining next year’s growth estimate at 8.7 per cent.
In a separate report, global credit ratings major Standard and Poor’s (S&P) said that India’s GDP would grow by 8.1 per cent in 2010-11, provided risks around high inflation and the current fragile global recovery was managed.
ADB also raised its forecast for annual average inflation in the current year to 7.5 per cent, up from 5 per cent in April, warning that high food prices remain a near-term concern.
It noted that the rupee’s appreciation by more than 11 per cent in real terms between August 2009 and August 2010, poses an additional challenge for policymakers as they seek to maintain high growth, while winding back stimulus measures used to help the economy recover from the global economic crisis.