UN Raises Projections For India's Growth, Making It The Fastest-Growing Economy

"I have been following the Indian economy now for seven years or so, I see a return to a high degree of macro-economic stability," he said. "We have seen that inflation came down, and this not only all related to the oil prices but also to a very prudent monetary policy, and we are seeing that the external imbalances have declined, current account balance is much better."

Asked about the differences in the UNDESA projections for India's growth and ESCAP's Pitterle said, "I believe that for India's economy whether it grows by 8.1 percent or 7.6 percent, that doesn't matter, not in the medium term or the long run. What is important is that it is balanced growth, that it is the same  growth, that it can really have five-ten years of this high growth period without major disruption without causing excessive inflation or other imbalances."

He attributed variations to the time periods and the models that were used to make the forecasts. "We use the calendar year. ESCAP may actually use the fiscal year, which starts on the first of April for India."

In the forecasting model DESA used, a significant part of the growth in India over the past year came from net exports mainly because, not because export grew strongly but because of imports declined, he said. The assumption was that net export decline - - that is the difference between the value of imports and exports - - would not continue with the same force, and eventually imports would pick up. "This is a good thing actually for the economy," he said. But "from a GDP perspective, higher import would lead to lower net export and that would probably translate into slightly lower growth."
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