Indian economy is expected to grow 8.5 percent in the current financial year and 9 percent in 2011-12, said Prime Minister Manmohan Singh on Friday in a speech at the plenary session of the G20 summit in Seoul.
India's economy grew 9 percent in each of the four years prior to the financial crisis but slowed to 6.7 percent growth in 2008-09, he said.
However, high unemployment in industrialized countries threatens a revival of protectionist sentiment, especially since the use of conventional monetary and fiscal tools to revive the economy has been exhausted. Uncertainty about the prospects of industrialized countries affects the investment climate and dampens the medium term growth prospects of emerging market countries, Singh said.
He suggested that much remains to be done to bring our economies back to the path of strong, sustainable and balanced growth.
Emerging market countries have done well on the whole, and especially so in Asia, he said.
The problem faced in rebalancing the global economy is well known. Major industrialized countries were running unsustainable current account deficits which have to be reduced to manageable levels. If this is not to have a contractionary impact on the world economy, it must be offset by reducing current account surpluses elsewhere. This rebalancing requires pursuit of appropriately coordinated policies in our countries, he added.
Efforts to achieve a strong recovery in the global economy are particularly important at present. Industrialized countries have resumed growth in 2010, although output gaps remain large and unemployment is still at crisis levels, he further added.