International Monetary Fund (IMF) today said India's economic growth rate will accelerate to 6.5 per cent in 2010 on account of robust domestic demand and rising private investment.
"India's growth is expected to accelerate to 6.5 per cent in 2010 from 5.33 per cent in 2009, on the back of strong domestic demand," the IMF said in its regional economic outlook.
"In particular, the normalisation of financial conditions is expected to support a rebound of private investment, sustaining demand even as the fiscal stimulus wanes," it added.
In its twice-yearly World Economic Outlook released in Istanbul earlier this month, the Fund had pegged the economic growth rate at 6.4 per cent for next year.
The World Economic Outlook had projected India's growth at 5.4 per cent for 2009.
Earlier this week, RBI retained economic growth projection at six per cent with upward bias for 2009-10 in its second quarterly review of monetary policy.
Even Prime Minister Manmohan Singh had recently said that the Indian economy would grow by 6-6.5 per cent in the current fiscal despite being affected by the global financial crisis and drought in the country.
On account of global financial meltdown, India's economic growth slowed down to 6.7 per cent during 2008-09, from over 9 per cent recorded in the previous three years.
In the first quarter of the current fiscal, Indian economy grew by 6.1 per cent.
The IMF said emerging Asia, in particular China and India are rebounding much more quickly that the western world.
It added that the economic recovery in Asia is faster than the rest of the world and is projected to grow by 5.75 per cent during 2010.
"The region (Asia) is out pacing other parts of the world, with the "green shoots" of recovery appearing earlier and taking firmer roots than elsewhere," the IMF said.
IMF forecasts suggest Asia will grow by 5.75 per cent in 2010, higher than the 1.25 per cent predicted for the G-7 economies, but short of the 6.66 per cent average recorded for the region over the past decade.
It added that the pickup in core inflation and inflation expectations in India suggest that demand pressures are already playing a role in pushing up inflation.
Inflation rose fastest in six months to stand at 1.51 per cent for the week ended October 17, much in line with the RBI's warning that inflationary pressures are building up in the economy.
RBI, in its monetary policy has projected inflation to touch 6.5 per cent mark with upward bias by end of the current fiscal.
