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Indian economy growth story is over ?

Horus

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Hello, goodbye: India’s growth story is over

by FP Editors May 31, 2012



Is India’s growth story over? Going by the latest gross domestic product data, the answer seems yes. At least in the medium term.India’s GDP grew by 5.3 percent in the January-March (Q4) quarter, far below expectations and much lower than the 6.1 percent growth seen in the December-ending quarter. In fact, it’s the slowest growth since March 2003.

More recently, economic growth has been slowing after March 2010 quarter, when GDP expanded by 9.4 percent. Since then, growth has been continuously declining (see chart below).Even for the financial year ending March 2012, growth slowed to 6.5 percent from 8.4 percent a year earlier.

What a climb-down for an economy that was once tipped to roar ahead in double-digits. Now, it will be a miracle if we manage to achieve even 7 percent growth in the current financial year. In fact, some international investment houses like Morgan Stanley, Goldman Sachs and Bank of America Merrill Lynch forecast India’s 2012 GDP to come in BELOW 7 percent.That may seem creditable in a world where several developed economies are projected to grow by 1-3 percent (if they’re lucky), but sub-7 percent is an abysmal growth rate for a nation that requires 7 percent growth as a bare minimum to employ the millions of young people entering its workforce every year.



You can also wave goodbye to the notion of India being part of a group of emerging nations leading global economic growth. The way things are going, we’ll be blessed if it manages to push itself along at a healthy pace.In fact, the slow growth rate even prompted Financial Times to refer to the economy as a “tortoise” in one of its reports. That means we’ve been downgraded from ‘elephant’ to ‘tortoise’ by the international media as well. Need we say more?

What do the numbers mean for India going ahead?

One, don’t expect things to get much better from here. An economy plagued by slowing growth, stubborn inflation, a high fiscal and current account deficit, a plunging rupee, slumping industrial and investment activity and declining exports requires a whole host of policy measures from the government to change the situation. There’s no sign of that happening yet. And until that happens, this economy isn’t going anywhere in a hurry.

Two, don’t expect the Reserve Bank of India to come to the rescue with hefty interest rate cuts. It most likely can’t. Its hands are tied by the continued threats to inflation and a plunging rupee. The central bank has raised interest rates 13 times since March 2010 in a bid to clamp down on inflation — with little success. Inflation still remains near 7 percent and rising food and fuel prices threaten to take it higher still. While oil prices have come down in recent weeks, the rupee’s depreciation has more than offset those gains by making oil imports costlier in local currency.

The RBI will find it tough to go on a rate-cutting spree when the risks to inflation remain high. (There is a possibility that prices could decline if demand falls dramatically because it then limits companies’ abilities to pass on price hikes. But that requires a collapse in demand. Do we need that kind of economic shock therapy?)

Three, stagnating growth and persistent inflation (stagflation) are quite possibly going to become the hallmarks of the Indian economy, at least in the short term. If the Indian economy’s growth continues to decline, there is the very real threat of ‘stagflation’ being used to describe the economy instead of growth. Goodbye growth, hello stagflation.

And all because this government couldn’t take appropriate action on time.

http://www.firstpost.com/economy/hello-goodbye-indias-growth-story-is-over-327223.html

http://india.nydailynews.com/newsar...-economic-growth-slides-to-slowest-since-2008

http://www.ndtv.com/article/india/india-feels-pressure-as-growth-rate-is-worse-than-predicted-220820
 

Yeti

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India economic news should only be posted on that section this needs to be deleted.
 

Bond

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Every economy goes through ups n downs... India will be back on track soon after the next elections... :D
 

Chinese-Dragon

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Every economy goes through ups n downs... India will be back on track soon after the next elections... :D
No. According to the latest poll data from India (in the other thread)... the "regional parties" are getting MUCH stronger. To the point where they will be instrumental in forming the next government.

Which means that "policy paralysis" will most likely continue, even after the 2014 elections.

Your only hope is to give one of the big parties the majority, preferably BJP. But that is incredibly unlikely, given how strong the regional parties are.
 

jarves

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No.It has just startted.Wait for some more years to see the effects
 

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