Abhijit Sen Gupta, senior economics officer, Asian Development Bank (ADB) India, tells Dilasha Seth the multilateral agency's forecast for growth in India was lower than the finance ministry's because of subdued investments. Edited excerpts:
Why is ADB pessimistis about India's economic growth?
Our numbers for India are low as new project announcements have come down. The investment sentiment, which translates into actual investment and gross domestic product (GDP) growth, is quite low. The subdued investment estimates have led to our conservative forecast on GDP growth.
Some industry players and economists have criticised the Budget proposals on retrospective amendments to the Income Tax Act from 1962 and the General Anti-Avoidance Rule (GAAR).
These proposals would be debated till the Finance Bill is passed. The corporate sector has expressed concern. However, the Budget increased the eligibility on viability gap funding projects. This is good for investment.
The Budget projected subsidies would come down. Given the Food Security Bill may be introduced in 2012-13, do you think the projections are realistic?
The government is willing to provide food security to the needy. However, it depends on the final estimates on subsidies in the proposed Food Security Bill and its impact on the fiscal deficit.