New Delhi: India is projected to see a faster growth of 7.5 percent this fiscal on the back of higher savings and investment rates, even as most of the Asia-Pacific economies are likely to expand at a slower pace, says a UN report.
"The Indian economy's strong fundamentals, namely high saving and investment rates and rapidly expanding labour force and middle class will ensure a steady economic performance... We expect it to expand by about 7.5 percent in 2012-13," UNESCAP Chief Economist Nagesh Kumar said.
The growth estimate in the current fiscal is higher than the estimated 6.9 percent growth in the last fiscal year.
The Indian government has projected the economy to expand by 7.6 percent in the current fiscal.
The UNESCAP report, however, said that weaknesses of major developed economies pose a major threat to the growth in the Asia-Pacific region, which could come down to 6.5 percent in 2012, from 7 percent in 2011.
"The higher cost of capital and reduced demand for regional export, combined with loose monetary policies and trade protection measures of some advanced economies, contributes to this slowing of Asia-Pacific growth in 2012," United Nations Under-Secretary-General Noeleen Heyzer said.
She said the Asia-Pacific economies should try to maintain a growth-inflation balance, cope with capital flows and exchange rate volatility and create jobs to achieve high growth.
As regards India, the UN report said there are indications the economy is turning around as core sectors, including manufacturing, show signs of recovery.
In 2011-12 fiscal the economy faced a twin shock of global slowdown and impact of tight monetary policy, it said.
Inflation, the report said, remained a concern for entire 2011 and tight money policy has put downward pressure on private consumption growth.
The report said inflation in India would remain around 6.5 percent in 2012. As per latest official data, overall inflation at the end of March was 6.89 percent.
"In line with increased prosperity, the food habits of consumers have been changing from cereals to proteins, fruits and vegetables, and to contain food inflation, supply of these items has to be enhanced," it added.
First Published: Thursday, May 10, 2012, 18:42