The Hindu Business Line : ESCAP optimistic on India’s growth prospects

Survey time: Mr Kamal Nath, Union Minister for Commerce and Industry, and Ms Noeleen Heyzer, Executive Secretary, UN-ESCAP, at a meeting in the Capital on Thursday.

Our Bureau

New Delhi, March 27 A United Nations report has said India’s gross domestic product (GDP) growth over the next few years is to stay between 8.5 per cent and 9.5 per cent but cautioned that “the sustainability of high economic growth with moderate inflation would depend critically on fiscal prudence and high investment levels”.

In its flagship report released here today by the Union Commerce and Industry Minister Mr Kamal Nath, the Economic and Social Commission for Asia and the Pacific (ESCAP) contends that “India could achieve and sustain a 10 per cent growth rate by further improving the country’s business environment, by developing its infrastructure and reforming the labour market”.

In his remarks, Mr Nath said the crisis on the agriculture front and the attendant price flare-up in essential commodities has been overshadowed by the sub-prime crisis.

The distortions in the global grains markets caused by heavy farm subsidies of rich countries must be squarely addressed. He lauded the ESCAP for keeping the focus on agriculture in its latest survey, stating that the socio-economic prevalent in this region calls for concerted policy responses to bring about sustainable and equitable growth.

In her remarks, the UN Under-Secretary General and the Executive Secretary of ESCAP, Ms. Noeleen Heyzer, said that “governments must show greater political will to address decades of policy neglect and failure in the agricultural sector. It is simply unacceptable that at a time when the economic growth of Asia and the Pacific has surpassed all expectations, we are not doing all that we can to improve the lives of more than 200 million people living in such poverty”.

Short-tern outlook

Looking at the short-term prospects of Asia and the Pacific, the survey notes that the region’s robust economic growth would continue this year, despite economic uncertainties in the US and the continued appreciation of regional currencies.

It further said that Asia-Pacific economies were entering a phase of “heightened uncertainty” with export-led countries to be the hardest hit by the ongoing financial turmoil in the US.

“In the worst case scenario of a recession in the US and a deeper depreciation of the dollar, the impact in much of the region would be harsh. Most vulnerable will be the exporters of high-technology products, such as electronics, to the US such as Singapore, South Korea and Taiwan”.

Exporters in the region would confront a double whammy of a weakening dollar due to sharply lowered interest rates in the US as well as slowing demand.

However, the survey states that the economic locomotives of China and India in the region are likely to boost the resilience of the region, with their economies continuing to grow at a robust pace, offering opportunities to other export- led economies.

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