UN report pegs India growth at 7.7% in 2012, 7.9% in 2013

India's economic growth rate will remain subdued at 7.7% in 2012 and 7.9% in 2013 as downside risks have increased, mainly on account of problems in Europe and the USA, says a UN report.

"India's economy is forecast to expand at a pace similar to 2011 in the following two years... at 7.7% in 2012 and 7.9% in 2013," the UN report on 'World Economic Situation and Prospects 2012' said.

The report cautioned, "The downside risks to the regional outlook have sharply increased in recent months... particularly in case of India. Double-dip recessions in Europe and the United States would have a significant impact on economic activities across South Asia."

The government recently lowered the GDP growth target for the current fiscal to 7% from the earlier estimate of 8.5%. However, the study gave a positive outlook on South Asia's economic growth prospects and projected that the region's economies will grow by 6.7% and 6.9% in 2012 and 2013, respectively, accelerating beyond the 6.5% growth rate experienced in 2011.

South Asia constitutes India, Pakistan, Nepal, Iran, Bangladesh and Sri Lanka.

The report also raised a red flag on India's fiscal deficit target, saying the Indian government is unlikely to achieve its deficit target of 4.7% of the GDP for 2011-12 as lower growth has brought down tax revenues and disinvestment in state-run companies has been put on hold.

Nevertheless, the study has given a positive outlook for India's job market, saying, "India is enjoying gains in employment rates."