London: Indian economy will grow by 9.1% in the current fiscal on the back of a strong rebound in the agricultural sector, OECD, the grouping of mostly developed economies, forecast on Thursday.
A grouping of mostly developed nations, Paris-based OECD had pegged India’s GDP growth at 8.3% for the year ending 31 March, 2011.
However, the OECD growth forecast should not confused with Government of India’s projections for this fiscal at 8.5%, since the methodologies differ. While India calculates GDP by excluding indirect taxes, OECD includes these taxes for its calculation of GDP.
“The Indian economy expanded very strongly in early 2010. The agricultural sector enjoyed a sharp rebound, following a return of normal rainfall patterns, while recovery in non agricultural sector continued to strengthen,” the Organisation for Economic Cooperation and Development (OECD) said.
About India, the grouping noted that there are signs that the economy is shifting from the recovery phase to one of sustained high growth.
“As fiscal stimulus continues to be withdrawn, a pick-up in consumption spending, aided by a recovery in farm incomes, and robust business investment are expected to be the mainstays of growth,” it added.
In the 2011-12 fiscal, Indian GDP is estimated to grow 8.2% and by 8.5% in the 2012-13 fiscal, OECD said.
According to the OECD, agricultural sector recovery has also helped to damp inflation, which is expected to moderate in the near term. Inflation, which was in double-digits for a long time, came down to 8.58% in October.
“With domestic demand strong and the current account deficit widening, a steadfast commitment to timely fiscal consolidation and further moves to normalise the stance of monetary policy will be important for ensuring balanced growth ahead,” OECD said.
Meanwhile, the grouping has projected the global economy to grow 4.6% this year and expand 4.2% in 2011.
However, OECD has warned that risks to global recovery could be higher in the wake of speed and magnitude of capital inflows in emerging market economies and instability in sovereign debt markets.