India is estimated to have one of the lowest economic growth rates among the South Asian Association For Regional Cooperation (SAARC) nations over the next two years, despite being the largest economy in the region, says a report. A report by the United Nation’s Economic and Social Commission for Asia and the Pacific (UNESCAP) has pegged India’s GDP growth at 5.9 per cent in 2012-13, attributing it to the ‘severe’ monetary tightening by the Reserve Bank of India (RBI). “India is projected to grow at 5.9 per cent in 2012-13 compared with 6.5 per cent in 2011-12,” UNESCAP said in the report titled ‘South and South-West Asia Development Report 2012-13.’ It has estimated GDP growth at 6.8 per cent in 2013-14 on the back of government reforms and a stronger than expected monsoon that gave the agency “reasons to believe the economy has turned the corner”. Though the UNESCAP’s growth projection is higher than the International Monetary Fund’s estimate of 4.9 per cent growth in the current fiscal, it is much lower than Bhutan and Afghanistan that are expected to grow at 7.9 and 6.9 per cent respectively (see chart). “High inflation and high interest rates adversely affected private consumption growth, industrial investments and business sentiment,” the report has said, adding that the government must work to boost growth. Emphasising that UNESCAP is “bullish on India’s growth prospects”, its chief economist Nagesh Kumar said RBI needs to ease monetary policy. “It is time to loosen the policy,” he said, adding the current inflationary trends are due to supply side issues and not demand side problems.