OECD ups India growth forecast, slams protectionism


London : The Organisation for Economic Cooperation and Development (OECD) Wednesday said India was on course to achieving a 7.2 percent growth rate next year but said it was concerned about what it described as the country’s increasing protectionism.

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The OECD said the Indian growth rate would dip to 5.9 percent this year before rising to 7.2 percent in 2010 – an upward revision of its previous forecast of 4.3 percent in 2009 and 5.8 percent the year after.

“In 2009, falling exports are projected to result in some slowdown in domestic demand. With the gradual recovery of the global economy and easier financial conditions, growth is projected to gradually regain momentum,” the OECD said in its latest Economic Outlook report.

“The extent of the deterioration in the fiscal position prior to the slowdown has reduced the scope for discretionary fiscal policy action. Indeed, the new government will face the need to restore fiscal discipline, speed up structural reform and increase sales of public-sector assets. Any further easing in policy should be achieved through lower interest rates, rather than discretionary fiscal expansion.

“The growing use of protectionist measures is a cause for concern,” it added.

Commerce and Industry Minister Anand Sharma is expected in Paris Thursday for an OECD ministerial meeting that will address key policy responses to restore financial stability and long-term growth in the backdrop of the current financial and economic crisis.

India is not a member of the OECD but has been invited to the meeting along with key non-members Brazil, Chile, China, Estonia, Indonesia, Israel, Russia, Slovenia and South Africa.