Warning that the Indian economy is yet to show signs of recovery, Asian Development Bank (ADB) president Haruhiko Kuroda advocated improvement in investment climate, upgrade of services and removal of trade barriers to lift the growth rate.
?For India, we project economic growth in fiscal year 2012 to slow to 5.4% before picking up to 6.5% in 2013. Unlike China, which has shown clear signs of stabilisation from the second half of last year, there is no clear evidence yet of growth recovery in India,? Kuroda said at a Ficci conference on Thursday.
The delay in implementing necessary reforms is one of the major factors that is hampering India?s competitiveness. ?But we expect that recent government reforms will help steer the economy back to strong growth. What is challenging is that these reforms must also make growth more inclusive,? he said.
While forecasting that the global economic slowdown will continue to be a ?serious drag? on Asian economies, particularly India and China, he said the slowdown in India was mainly due to a slowdown in investment ? fixed capital formation was up by only 2.3% in the first half of fiscal 2012against 9% in the same period of the previous fiscal. ?Consumption in both economies is also stagnating,? he added.
The need is to dramatically expand the sources and volume of available infrastructure financing, he said, adding this will not be possible without private sector participation. Considering India?s young and growing labour force, the service sector needs to create more jobs for the millions who will join the workforce every year.
