The Hindu Business Line : EIU sees slight slowdown in economic growth rates

New Delhi March 12 India's economic growth will average 7.6 per cent from now to 2010, according to the Economist Intelligence Unit (EIU). This forecast is lower than the average 9 per cent growth rate projected by the Government for the Eleventh Plan period beginning from April .

Asked as to why EIU does not share the optimism of the Indian Government on the growth prospects, Mr Ravi Bhatia, Senior Economist-Asia, EIU said that EIU sees "some slight slowdown" in growth rate up to 2010.

"We have already raised some issues on overheating. However, we expect the Indian economy to grow close to 8 per cent. To get to 10 per cent levels and sustain such rates, the Government has to speed up and deepen structural reforms," Mr Bhatia said.

He highlighted that structural reforms have been slow and limited. "Privatisation, labour reforms and power have all been scuttled. Fiscal situation is still troubling despite improvements," Mr Bhatia said.

At the downside low growth scenario, EIU does not expect India's economic growth rate to fall below 6.5 per cent.

Mr Bhatia also maintained that India's growth would be driven by services. "Although trend growth in manufacturing has picked up, India is not a major player at the global level. Manufacturing has increased on the high end. Mass manufacturing has not taken off. To give employment to large mass, mass manufacturing has to take off. India has a long way to go," he said.

The ABN Amro Bank's Chief Economist for India, Mr Abheek Barua, however, did not agree to the observation of Mr Bhatia that India will be a services-driven economy. "I think there are successes in manufacturing. We are now a bigger export platform to world markets in automobiles. There is also emergence of SME sector," Mr Barua said.