World Bank pegs India's growth around 9%

Terming India’s economic recovery as “robust”, the World Bank on Tuesday projected the Indian economy to grow by about 8.5—9 per cent in the current and next financial years.

The estimates are almost in line with those made by the Prime Minister’s Economic Advisory Council (PMEAC), which expects that the GDP would expand by 8.6 per cent this fiscal and 9 per cent in 2011—12.

In its India Economic Update released today, the World Bank said that strong headline GDP growth and quarter on quarter results indicate that “economic recovery is robust“.

“Looking forward, GDP growth looks set to regain the pre crisis trend of around 8.5—9 per cent in this year and the next (FY 2011—12),” the multilateral lender said.

In the first six months of this fiscal, the economy rose by 8.9 per cent.

According to the World Bank, the overall wholesale price inflation is likely to come down to 7 per cent by March end.

Inflation is likely to decline further in the next fiscal, “although uncertainty over international commodity prices persists,” it added.

The PMEAC yesterday revised upwards its inflation forecast to 7 per cent by March end from earlier estimate of 6.5 per cent.

“The RBI is likely to continue its policy of cautious rate hikes in a highly uncertain environment,” the Bank noted.

It said that while inflation has become more broad based, capacity utilisation, industrial production, import, and credit indicators do not point to overheating.

“The signals are, therefore, not clear whether core inflation is caused by more general demand pressures, which would best be addressed with more aggressive policy tightening, or by second round effects of earlier food and commodity price shocks, for which the current monetary policy stance is likely to be adequate,” the multilateral lender said.