The Indian economy will grow by 6.9% in this financial year (2012-13) notwithstanding problems like policy uncertainties, fiscal deficit and inflation, the World Bank projected on Tuesday, while cautioning that developing nations will have to face tougher times.
"India will see growth (measured at factor cost) increasing to 6.9%, 7.2% and 7.4% in fiscal years 2012-13, 2013-14 and 2014-15, respectively," the World Bank said in the report titled 'Global Economic Prospects'.
Referring to developments in 2011, the multi-lateral lending agency said that growth in India was particularly weak due to monetary policy, stalled reforms and electricity shortages. These factors, along with fiscal and inflation concerns, cut into investment activity, it added.
India's economic growth rate in 2011-12 slipped to a nine-year low of 6.5%. The economy had expanded by 8.4% in the preceding two years.
For the current fiscal, the government has pegged growth at 7.6%. Considering global uncertainties and domestic woes, this growth rate could be tall order for the country.
"Growth in South Asia slowed to 7.1% in 2011, from 8.6% in 2010, as headwinds from the Euro Area crisis caused a steep deceleration in exports and a reversal of portfolio inflows," the report said.
Meanwhile, the global economy is expected to expand 2.5% this year.
According to World Bank, developing nations should prepare for a long period of volatility in the global economy by re-emphasising on medium term development strategies. "Developing country growth will slow to a relatively weak 5.3% in 2012, before strengthening somewhat to 5.9% in 2013 and six per cent in 2014," it said.
Krinvanto Vishwam Aryam
(Make this World Noble)