ESCAP sees slowdown, projects growth at 6 pc

During 2005 and 2006, India is expected to once again outsmart the average growth of 6.0 per cent in the Asia-pacific region. Despite an expected lower growth this year, India would still outperform its neighbours — Pakistan (4.3 per cent), Bangladesh (5.7 per cent), Nepal (3.5 per cent). Sri Lanka is expected to log 6.0 per cent growth in 2004 while Bhutan is likely to grow by 7.5 per cent. These two countries are expected to grow faster than India in the next two years as well.While forecasting a lower growth in 2004, the UN body said inflation was likely to fall from 4.8 per cent in ’03 to 4.0 per cent this year and further dip to 3.5 per cent in ‘05 and 3.0 per cent in the year after.

ESCAP attributed the “significant” recovery in 2003 to bumper foodgrain harvest and sustained performance of industrial and services sectors. “Another positive influence came from several fiscal and monetary incentives in the central government budget for 2003 to boost industrial production and infrastructure development,” ESCAP said.

Though it lauded government for rationalising both direct and indirect taxes on industrial products, cutting peak customs duty to 20 per cent and reduction in lending rates by commercial banks, it warned India of high fiscal deficit.