Washington, Jan 13 (Agencies): India is expected to slow down a tad to 8.4 per cent this year from an estimated 9.5 per cent in 2011 before rising again to 8.7 per cent in 2012, said the World Bank.

South Asia as a whole is still projected to continue to post robust growth of 7.7 per cent and 8.1 per cent over the forecast horizon in FY2011/12 and FY2012-13, respectively-albeit a deceleration from the 8.7 per cent growth recorded in FY2010/11, it said.

The projected slowdown in South Asia's real GDP growth this year follows its acceleration from 7.0 per cent in FY2009-10, buoyed by very strong growth in India, up 1.8 percentage points from 7.7 per cent in 2009, the World Bank's Global Economic Prospects 2011 released on Thursday noted.

Excluding India, which represents 80 per cent of regional GDP, growth (on a fiscal year basis) firmed, but to a more modest 5.1 per cent from 4.3 per cent the year before.

On a calendar year basis, GDP for the region as a whole is estimated to have expanded 8.4 per cent in 2010 after 5.3 per cent in 2009, and to 4.8 per cent in 2010 from 3.8 per cent in 2009 if India is excluded, the Bank noted.

These strong growth rates mainly reflect robust domestic demand, supported by macroeconomic policy stimulus measures, and a revival in investor and consumer sentiment, the Bank said noting improved external demand and stronger private capital inflows have also played a role.

However, despite some modest progress toward fiscal consolidation in 2010, South Asia has the largest fiscal deficit among developing countries with the region-wide deficit estimated at 8.2 percent in 2010 with India's fiscal deficit pegged at 9.6 percent of GDP.

India is targeting progressive reductions in the Central Government's fiscal deficit to three per cent of GDP by end-FY2013-14 from 6.7 percent in FY2009-10, which will be supported by proceeds from divestment and reforms to fuel-subsidy programmes.

Other factors have contributed to the region's large deficits, including in the case of India, for example, elevated countercyclical spending that has yet to be fully unwound.

Inflationary pressures were up across most economies in the region in 2010, with elevated capacity utilisation rates, accommodative macro-policy stances and increased inflationary liberalization of fuel-price subsidies contributing to higher prices in India.

More recently, inflationary pressures have been partly offset by falling local food prices, due to improved harvests following a good 2010 monsoon, particularly in Afghanistan and India.

Compared with other developing regions, where portfolio inflows averaged 0.8 percent of GDP in 2010, portfolio inflows are relatively high in South Asia-and largely reflect record high foreign portfolio inflows into India during 2010.