Thaindian News

New Delhi, April 7 (IANS) The Asian Development Bank (ADB) has lowered India’s growth forecast to 8.2 percent in the current fiscal from an estimated 8.6 percent in 2010-11, warning that persistently high inflation and rising oil price pose threat to the economy.

The growth is expected to moderate in fiscal 2011-12 as “slower external demand and tighter fiscal and monetary policies weigh on expansion, and high oil prices remain a threat,” the Manila-based ADB said in its 2011 Asian Development Outlook.

However, the bank said India’s economic growth is expected to bounce back to 8.8 percent in 2012-13 as investment and overall economic activity pick up and as planned reforms move forward.

The Indian government targets to accelerate economic growth to 9 percent in the current fiscal from the estimated 8.6 percent growth in the financial year ended March 11.

Indian policy makers have been struggling to control inflationary pressure.

Food inflation remained in double-digit for most part of 2010-11. Food inflation moderated marginally to 9.18 percent for the week ended March 26 from 9.5 percent in the previous week.

The annual rate of inflation was recorded 8.31 percent in February.

“India’s foremost development challenge is to achieve sustainable and inclusive growth,” ADB’s chief economist Changyong Rhee said in the report.

To achieve these goals, the government needs to tackle structural constraints, including the poor agriculture supply chain and farm productivity.

A positive start has been made with programmes to remove production and distribution bottlenecks for farm products and these steps should continue, the report said.

Transforming manufacturing sector by reducing infrastructure bottlenecks and investment hurdles linked to labour regulations, land acquisition and environmental clearances should also be addressed.

“More robust manufacturing can absorb the young and growing workforce, including those shifting from farm work, with productive and well-paid jobs,” said Rhee.