I have checked the Java >> Compiler options from Windows >> Preferences menu and option of 'Add variable attribute to generated class file' was unchecked. I have enable that option and this resolves the issue. Now 'Watch' and 'Inspect' are working fine in my particular web project. See screen shot
I am not sure why this why enabling this option is necessary because in all other projects (in same workspace) debugging is working fine with this option disabled. Can anyone explain?