India to grow by 6%: ADB

The Asian Development Bank (ADB) on Tuesday raised India’s growth forecast for 2009-10 to six per cent from its earlier targeted five per cent.

“An increase in public spending, a quicker than expected return of capital inflows, stronger industrial production, and signs of improved business confidence will lift economic growth to six per cent in India this year, up from an earlier estimate of five per cent,” said the ADB.

It said that while agricultural output for 2009 is expected to remain stunted and exports weak, “fiscal stimulus packages and accommodative monetary policy have minimised the damages from the global financial crisis and are supporting a relatively strong economic expansion again.”

“The government’s strong fiscal stimulus, complementing the Reserve Bank of India’s aggressive monetary policy easing, has successfully brought last year’s economic slowdown to an end,” said the ADB chief economist, Mr Jong-Wha Lee. Growth in the first quarter of 2009 reached 6.1 per cent.

Weak agricultural output in the second and third quarter is likely to weigh on growth, the report added.

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