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India's Economic Growth Forecast at 6 Percent in 2002

MANILA, PHILIPPINES (9 April 2002) - India's economy is expected to pick up slightly in 2002, growing by 6 percent compared to 5 percent in 2001, according to a major Asian Development Bank (ADB) report released today.

The Asian Development Outlook 2002 (ADO), an annual publication of the ADB which forecasts economic trends in the region, says that India will profit from the US rebound and the global economic recovery, stimulating export growth and industrial production. In 2003, the economy is likely to grow by 6.5-7 percent.

The current account deficit will remain moderate, at about 1 percent of gross domestic product (GDP) in 2002. Inflation should hover around 4 percent.

The GDP growth in 2001 is slightly higher than the 4 percent in 2000 but below the 6.5 percent average rate of the previous five years.

Agricultural growth was estimated at 5.7 percent in 2001. Yet prospects for sustained improvement depend on investment to ease infrastructure bottlenecks and to modernize the sector.

The services sector continued to fuel the economy as it recorded an increase of 6.5 percent. This compares with 4.8 percent in 2000 and reflects robust performance in financial, business and high-tech services.

On the negative side, the ADO notes that the global slowdown impacted on exports, which fell in 2001 after growing by nearly 20 percent in 2000.

Foreign investment expanded by 61 percent in 2001, to $2.4 billion from $1.5 billion. In view of this, the balance of payments should register a surplus for the sixth straight year.

India's Tenth Five-Year Plan (2003-2007) set an 8 percent GDP growth target and plans to expand social services. If these goals are met, it would mean:

• A reduction in poverty by 5 percent by 2007.
• All children will be in school by 2003 and literacy rates will rise to 75 percent by 2007.
• A reduction in literacy gender gaps by 50 percent by 2007.
• A reduction of the infant mortality to 45 per 1,000 live births by 2007.

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