The World Bank on Monday forecast India's economy to expand by 5.1 per cent this fiscal, the slowest in six years, although the country has consistently outperformed the multilateral funder's estimates in the past.
The Indian economy had grown by 6.7 per cent in 2008-09 against the World Bank's estimate of 6.1 per cent, despite recession setting in most of the developed nations.
"Almost two years after problems in the US mortgage market set in motion the biggest financial crisis since the Great Depression, global financial markets remain unsettled, and prospects for capital flows to the developing world are dim," the Bank said in its report - 'Global Development Finance: Charting a Global Recovery'.
Prime Minister Manmohan Singh has acknowledged that there is indeed a slowdown in foreign investments, but exuded confidence that Indian could soon return to the days of 8-9 per cent growth on the strength of its domestic savings, which was around 35 per cent of the GDP and is the second highest savings rate in the world. Singh, however, said that this fiscal he expects the country's economy to grow by seven per cent.
The Reserve Bank of India itself has put the possible growth numbers at six per cent - 0.9 percentage points more than the estimates of the World Bank. India's economy had expanded by 8.5 per cent in 2003-04.
The Washington-based fund warned that developing economies would have shrunk if it were not for China and India.
The developing nations are projected to grow 1.2 per cent this year and without China and India, these economies would contract 1.6 per cent in 2009.
