India and other developing countries that have sustained their strong growth because of domestic demand could be affected by impending recession in developed economies, a UN agency has said warning that aggressive fiscal tightening could actually worsen the problem. Calling for comprehensive financial reforms, the ‘Trade and Development Report 2011’ of the UNCTAD released on Tuesday has said “the new financial turmoil should be a wake up call for the international community and its institutions”. Comprehensive financial reforms, including a rulesbased floating currency regime and stricter market regulations, are needed more than ever, the agency said projecting a drop in global GDP growth to 3% in 2011 from 4% in 2010. In 2011, the growth of international trade is expected to return to single digits in the range of 7-8% as opposed to a 14% growth in 2010 after trade rebounded sharply. Growth in developed countries is likely to shrink from 2.5% in 2010 to 1.5-2% as governments replace supportive macro-economic policies by austerity measures. India is expected to grow at 8.1% in 2011 as opposed to 8.6% in 2010, according to UNCTAD report. “India continues to pursue rapid economic growth based mainly on strong domestic consumption and investment, but also on the positive contribution on net exports,” the report focussing on post-crisis policy challenges in world economy said. The report, however, cautioned that while growth in developing countries has become more and more dependent on the expansion of domestic markets, these countries still face significant external risks because of economic weakness in the developed economies and a lack of significant reforms in international financial markets. Trade Report