ADB upgrades India’s growth forecast to 6%

Country's growth rate slipped from 9 per cent to 6.7 per cent in 2008-09 on account of the impact of the global financial crisis.

Multilateral lending agency Asian Development Bank has revised upwards India’s growth projection to 6 per cent for the current fiscal on account of rising business confidence but warned that inflationary pressure would continue.

“Emerging signs of a recovery in private business confidence and a continued large fiscal stimulus announced in the July 2009 budget helped bolster India’s projected economic expansion to 6 per cent this year,upgraded from 5 per cent in March,” ADB said in its update on Asian Development Outlook 2009.

India,it added,would be able to clock 7 per cent growth rate during 2010-11. Country’s growth rate slipped from 9 per cent to 6.7 per cent in 2008-09 on account of the impact of the global financial crisis.

Projecting an inflation of 4-5 per cent by March 2010,the ADB said,”inflationary pressures are likely to persist,driven by high food prices and expansionary monetary and fiscal policies.”

The inflation has turned positive for the week ended September 5,after remaining in the negative zone for about three months.

Rising food inflation,ADB said,would create a dilemma for the monetary authority which is currently engaged in combating the impact of the financial meltdown by following easy money policy.