The Hindu Business Line : UN body projects 9% GDP growth this year

Bullish on prospects
Manufacturing exports up 37.3 per cent in April - September 2006.
Meeting with exporters next week on rising rupee.
Government "flexible" on SEZ land cap.

New Delhi April 18 The UN Economic and Social Commission for Asia and the Pacific (Escap) has said the Indian economy is expected to grow around 9 per cent this year, underpinned by a strong performance by the industrial and services sectors.

In its 2007 annual report, released here by the Union Commerce & Industry Minister, Mr Kamal Nath, the Bangkok-based UN body said that India maintained its growth momentum in 2006 with GDP growing at 9.2 per cent.

Stating that strong economic performance has generated growing private sector demand for transport, communications, financial services and trade-related activities, the report said this coupled with the rapid increase in spending on public administration, social services, rural extension service and defence has pushed up the share of services in GDP to 55.1 per cent in 2006.

Mr Nath said this year's survey drew particular attention to the ascendancy of India's economic powerhouse. India's contribution to global growth has nearly doubled in the last two decades and this was mostly powered by high export growth in recent years.

He said the report found that besides the remarkable performance in IT services, India is rapidly emerging as a force in manufacturing exports, with capital-intensive products featuring prominently. These exports, dominated by engineering, chemicals and petroleum products, grew 37.3 per cent year-on-year from April to September 2006.

Key drivers

He said the report also highlighted the enormous trade potential between India and China and said that together with Japan, these three countries would be the key drivers of global growth this year.

The Minister said the recent appreciation of the rupee has hurt exporters and urged them to become "more competitive".

He said "I have called a meeting of exporters next week to discuss the impact of the rupee's appreciation".

On the controversy over limits on land acquisition for SEZ, he said "the Government is willing to be flexible" on the limits of 5,000 hectares land area on SEZs set by the Empowered Group of Ministers early this month. "In future should a proposal come that looks at an area that may be larger, we are willing to look at it," he added.

In his power-point presentation, the Executive Secretary of UN-ESCAP, Mr Kim Hak-Su, said this year's survey titled `Surging ahead in uncertain times' looks at the most critical issues, challenges and risks the Asia- Pacific region faces in the months ahead.

He said that Asian and Pacific nations are rapidly emerging as engines of global growth. In 2006, the 7.9-per-cent increase in the size of the region's developing economies represented a third of worldwide growth.

Mr Kim said that although the outlook for the current year is good, "there is no room for complacency" as downside risks still remain.

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