World Bank has forecasted a slower 7-8% growth rate in next couple of years for the Indian economy. Gone are those days of near double-digit growth rate in the domestically-fired Indian economy. Indian economy grew by 8.5% in the fiscal 2010-11.
However, the World Bank expects inflation to ease in the October-December quarter of this fiscal, which would bring an end to RBI’s efforts to hike interest rates further and gradually dip south wards in the ensuing period.
The World Bank has pegged lower Indian growth at 7-8% for FY 2010-11 and FY 2011-12, on the back of higher interest rates, uncertain investment climate and base effect of strong agricultural rebound in the last fiscal year.
Moreover, the World Bank also raised concerns towards country’s apprehensive policy towards land acquisition laws, regulatory hurdles over environment clearances, uncertainty on the prospects of mining sector, power projects hit by coal and fuel linkages and tax reform movements.