India to grow at 6% this year: UN

While many of the developed countries witnessing shrinking of their economy, India would still maintain a growth rate of 6% in 2009, United Nations report on Thursday said.

While anticipating that the country?s economy would grow by 7.1% in 2008, a report by UN Economic and Social Commission for Asia and the Pacific (UN-ESCAP) said that due to various measures taken by the government in the recent months which would ?soften? the economic downturn.

?The government took measures to improve the liquidity of the financial sector and relaxed monetary policy and also introduced fiscal stimulus packages which should soften the economic downturn,? the report titled Economic and Social Survey of Asia and the Pacific 2009 said.

Real economies of South Asia are set to weather the effects of the global slowdown better than many in the Asia-Pacific region due to India?s economic growth, ESCAP report said.

It said that decline in India?s exports in 2009 would be mainly on account of fall in exports, Economic Affairs Officer of ESCAP Shuvojit Banerjee said after releasing the report.

Stating that fiscal situation for the government has ?deteriorated?, the ESCAP report categorically said due to factors such as recent stimulus packages to contain deceleration in economic growth, significant increases in government salaries and subsidies for food, fertilizer and certain fuel products, the budget deficit is estimated to rise to 6% of GDP in 2008.

After several years of fiscal consolidation facilitated by strong economic growth, the budget in 2008 remained under pressure.

The deficit of the central government was brought down to 2.7% of GDP in 2007 and a target of 2.5% was set for 2008.

On inflation, the report said that with falling prices of oil and other commodities in the international market, the rate of price rise is expected to dip further in 2009.

It added that due to increase in government salaries and subsidies for food, fertiliser and certain fuel products, the budget deficit is estimated to rise to 6% of the GDP in 2008.

It said that during 2005-7, India achieved an average growth rate of 9.4% aided by strong performance by industry and services. ?An investment boom, growth in consumer demand, rising incomes, ample bank credit and robust exports sustained the vibrancy in industry and services,? the report stated.