The Hindu : Business : ADB pegs India's GDP growth at 7.4 p.c.

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Friday, Jun 25, 2004

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ADB pegs India's GDP growth at 7.4 p.c.

NEW DELHI, JUNE 24. The Asian Development Bank today pegged India's economic growth at 7.4 per cent for this year and said high growth is likely to be sustained in medium term.

The Manila-based bank, however, warned that fiscal situation remains a `cause for concern' and said if the new UPA Government failed to come to grips with the fiscal challenge, macro-economic stability and growth buoyancy would be jeopardised.

"The near-term economic outlook is promising. The economy is on the upswing of a business cycle and the underlying long-term growth rate is accelerating. Based on the positive assumptions, the GDP is forecast to grow at 7.4 per cent in 2004," ADB said in its Economic Bulletin. The high GDP growth is forecast on the assumption that agriculture is slated to grow by 3 per cent, industry by 9.3 per cent and services by 8.5 per cent this year.

Projecting a downturn of industry next year, ADB said the GDP was expected to grow by 7.6 per cent in 2005, mainly on the back of a robust 9 per cent growth in services sector.

Prescribing a `cautious policy' on capital account liberalisation, ADB said, "A shift in international investor preferences could curb or even reverse the inflow of foreign capital, which is largely in the form of reversible portfolio investments, short-term loans and banking capital." In addition, ADB said "hardening of oil prices could trigger inflation and also widen the trade gap."

— PTI

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