ADB hikes GDP forecast to 8.5% but warns about inflation

• The Asian Development Bank (ADB) on raised India's growth forecast for the current fiscal to 8.5 per cent from 8.2 per cent but expressed concern over persistent high inflation and rising value of rupee which could undermine future economic expansion.
• The multilateral lending agency had projected a growth rate of 8.2 per cent for 2010-11 in April. For the next financial year (2011-12), ADB has retained its earlier projection of 8.7 per cent.
• ADB's growth projection for current fiscal is the same as had been forecast by the Finance Ministry, the Reserve Bank of India and the Prime Minister's Economic Advisory Council.
• Expects the average inflation to be 7.5 per cent during the current fiscal as against its earlier projection of 5.5 per cent. 
• ADB also warned that the raising value of rupee does not augur well for the Indian economy in the coming years. Rupee appreciated more than 11 per cent in real terms between August 2009 and August 2010, it added, stating that this "poses an additional challenge for policy makers as they seek to maintain high growth while winding back the monetary and fiscal stimulus measures used to help the economy recover from the global economic crisis".
• High inflation and rupee's sharp appreciation, it added, could erode India's export competitiveness and its plans to further expand economic growth to 9-10 per cent in coming years.