Print this Story
NEW DELHI (AFP) –
India's economy will rebound to pre-financial crisis growth levels of nine percent in two years, the government said Thursday, and could become the world's fastest expanding in four years.
A finance ministry report, unveiled a day ahead of the budget, said the upturn gives the government room to start a "gradual rollback" of 162 billion dollars in stimulus put in place to shield the economy from the global slump.
India's economy was one of the least hit by the global crisis and has been "one of the growth engines, along with China, in facilitating faster turnaround of the global economy," the annual Economic Survey added.
The finance ministry's economic survey for the fiscal year to March 2010 projected economic growth would reach 8.75 percent in 2010-11, quickening to over nine percent in the following year.
That compares with forecast growth of up to 7.5 percent this year to March and 6.7 growth last year when the economy was sideswiped by the global slump.
"It is entirely possible for India to move into the rarefied domain of double-digit growth and even attempt to don the mantle" of the fastest-growing economy in the world within the next four years, the report said.
China, which expanded by 8.7 percent in 2009, is now the fastest growing economy.
"The fast-paced recovery of the economy underscores the effectiveness of the policy response of the government in the wake of the financial crisis," the report presented to parliament said.
"The broad-based nature of the recovery creates scope for a gradual rollback, in due course, of some of the measures undertaken over the last 15 to 18 months," the report added.
But at the same time, the document said soaring food inflation, now running at close to 18 percent, was a major problem and could spill over into other areas of the economy, driving up overall inflation, now at 7.3 percent.
It added other risks remained as the recovery in global trade was still fragile, with demand fuelled by government spending.
The stimulus effects could evaporate if "natural recovery" does not follow.
The survey, prepared by officials who advise on drafting the budget, also urged India to open up faster such sectors as health insurance, rural banking and higher education to foreign direct investment.
