Shrugging off International Monetary Fund’s (IMF) conservative growth forecast for the Indian economy at 5.7 percent for 2013, the UN has projected a more liberal growth projection for the country. In a report released on Thursday, it says the country will grow at 6.4 percent but also warns infrastructure deficits.

“In India, economic activity slowed considerably in 2012. But in 2013, India will grow at increased growth rate — 6.4 percent,” says the UN Economic and Social Survey of Asia and the Pacific (UNESCAP) for 2013.

According to the survey, China is expected to grow at 7 percent in 2013.

"Hopefully, the worst (phase for the economy) is over and the trajectory of growth can pick up now," UNESCAP’s chief economist Nagesh Kumar said.
But flagging off infrastructure deficits, the report identifies power and transportation sectors as two bottlenecks hindering India’s growth story.

“Long-term structural issues, such as rising inequality, energy and infrastructure shortages are compounding the regional slowdown,” the report warns.
Finance minister P Chidambaram had recently said that India needs $1 trillion in infrastructure projects alone over the next five years.

But the good forecast notwithstanding, it would not be an easy roll for the country, as the report says long-term structural issues — rising inequality, energy and infrastructure shortages, among others — are compounding the regional slowdown. “Structural solution to invigorating the domestic drivers of growth…will lie in making the development process more inclusive and sustainable,” it says.

There is a big relief in terms of inflation, which is forecast to remain at 7 percent in 2013. The inflation hovered around 10 percent in 2012, resulting in the Reserve Bank of India (RBI) tightening monetary policy.

“Softening of oil and commodity prices in international markets would also help the Indian economy, given India’s high dependence on imports, and would assist in moderating the current account deficit,” the report warns.

Praising the country’s efforts in creating social structure programmes like Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) for safety net, the report also suggests other countries can roll out such social security programmes. It says MNREGA has benefitted 48 million households in over 600 districts to come out of poverty in 2012-13. The programme also helped strengthen rural growth, the economic resource base and social protection, it said and suggested that India should increase its tax to GDP ratio, which is one of the lowest in the world.

This is one of the oldest surveys of the UN body, reporting on economic and social surveys since 1947.

Read the report

here

.