India can achieve 8-9% economic growth: ADB President

Asian Development Bank (ADB) on Friday said the fiscal consolidation roadmap announced by India will help in getting back to high economic growth rate of 8-9 percent in the coming years.

New Delhi: Asian Development Bank (ADB) on Friday said the fiscal consolidation roadmap announced by India will help in getting back to high economic growth rate of 8-9 percent in the coming years.

"The government is, I think, taking quite appropriate fiscal consolidation efforts and measures. Indian economy is likely to recover in 2013 fiscal year," ADB President Haruhiko Kuroda told reporters here.

Indian government, he said, has been taking appropriate measures to consolidate fiscal situation and steadily reduce the deficit.

"I understand that Indian government has been taking this appropriate policy stance, so that over the medium-term full potential of the Indian economy can be realised. I personally think that Indian economy can achieve 8 to 9 percent growth annually in medium to long term," he added.

India has outlined a fiscal consolidation roadmap. It plans to restrict the fiscal deficit for the current fiscal at 5.3 percent of GDP in the current year and bring it down to 3 percent by 2013-14.

Kuroda said while no strong signs of recovery have appeared yet, "we are reasonably sure that Indian economy would be recover".

Manila-based ADB will come out with its latest India growth projection in the first week of April.

The growth in the current fiscal is likely to slip to a decade-low of 5.7 percent, but is expected to rebound in 2013-14. In 2011-12 fiscal, economy grew by 6.2 percent.

The 46th ADB Annual Meeting is scheduled at India Expo Mart in Greater Noida from May 2 to 5. This will be third annual meeting of ADB in India.

Earlier in the day, Kuroda called on Finance Minister P Chidambaram to discuss the upcoming annual meeting of ADB.

"I expressed my thanks to him for the government agreeing to host the 2013 annual meeting and for all its preparatory work," he said.

The annual meet is expected to be attended by over 4,000 participants from member governments, academia, international organisations, private sectors and civil society among others.

The ADB President said the annual meet at Greater Noida is likely to be one of the biggest ever.

Theme of the ADB's 2013 annual meeting is 'Development through Empowerment'.

This is an issue close to the heart of both ADB and the Indian Government, Kuroda said.

Referring to risks to the developing nations in the Asia- Pacific region, Kuroda said the ongoing eurozone crisis is one of them.

"I think we assume that worst phase is over, but still crisis situation continues in Eurozone," he said.

On ADB's country partnership strategy regarding India, Kuroda said the agency was in process of consultations with Indian government in this regard.

When asked about media reports regarding his appointment as governor of Bank of Japan, Kuroda said he still has about four year term left at the ADB.

Meanwhile, ADB Country Director (India) Hun Kim said that in the next five years till 2017, the agency is planning USD 12 billion lending for India.

Of this, USD 10 billion is for public sector and the remaining for private sector lending.

Kim further said ADB was in talks with the Punjab government for extending USD 200-300 million loan and an agreement is likely in 2013-14.

To another query, he said that ADB was working closely with IIFCL for a deal related with GMR bond issue.

As per the proposal, IIFCL and ADB are likely to guarantee a Rs 316 crore bond issue of GMR for construction of roads in Andhra Pradesh.

"...Then we hope to replicate this pilot facility may be to 10 more. In doing so we will be able to ascertain price discovery of this new bond issue," he said.

He also said that ADB was in discussion with the Department of Economic Affairs in the Finance Ministry so that it lending could be done in Indian currency.

"We lend dollars, (but) in India what we need is local currency. We should be able to lend in local currency. Currency swap will give us lower cost, that is being discussed with DEA," he said, adding, a decision is not expected to happen "immediately".

So far, he said, ADB is lending in local currency selectively for private sector.