OECD sees India economic growth at 8.5% in 2011-12

The Organisation for Economic Cooperation & Development (OECD) has projected the Indian economy to expand 8.5 per cent in 2011-12, much lower than the growth of 9.6 per cent witnessed in 2010-11 financial year.

OECD said in 2012-13, the economy is projected to expand 8.6 per cent. OECD, a grouping of 34 developed and developing nations, noted that India’s growth slowed to a more sustainable pace towards the end of 2010, after strong post-crisis rebound driven by a surge in private investment.

Corporate sentiment
“Going forward, growth will pick up somewhat, underpinned by buoyant corporate sentiment and demand for infrastructure spending,” the think-tank said.Pointing out that inflationary pressures have become more generalised due to rising non-food prices, OECD said that liberalisation of FDI in retail sector would help in easing pressures of food inflation.

“... liberalisation of foreign direct investment in the retail sector would promote competition and help modernise supply chains, thereby reducing food inflation pressures,” it added.
“A renewed commitment to reducing subsidies is needed to lower the burden on public finances. Efforts to better target subsidies on the needy ought to be stepped up,” OECD added.