Prolonged global recession a major threat to India's growth


Bangalore: The Organization for Economic Cooperation and Development also said that the world economic recovery has slowed and is cutting its forecast for growth in developed countries in 2011. The Paris-based organization also warned that the global economic crisis has brought "public deficits and debt to unsustainable levels." Reserve Bank of India Governor Duvvuri Subbarao told analysts in a conference call, a day after it hiked key rates as expected said that one of the main risks to domestic growth is a prolonged global recession. RBI raised its key policy rates for the sixth time since March and said it was unlikely to adjust rates again in the near future but would remain vigilant about inflation that remains above its comfort level. "As recovery in the global economy is still fragile, on the negative side, there is possibility that the projected growth rate may undergo change due to external factors," the government said in the report titled Government Debt - status and road ahead. The government projects a nominal GDP growth of 12.5 percent in 2010/11, 13 percent in 2011/12, and 13.5 percent each for the next three years. It will also try to reduce the overall cost of borrowing by gradually reducing deficit financing requirement in the medium term.