i knew i will be pointed the year.. so lemme state why i had shown that data... the supply side constraints had pulled the economic growth down but the base was and is always there.. the bottlenecks are sure to get addressed and the path of growth will be visible again... my intention in that article was not to show the high growth story but rather the which can galvanize the growth trajectory. In simple words, a proper planned, sound decision making process can make the growth % back up and make up for so called last 3 years laggard ways..
Here i am quoting the chief points from various sources
"Recent indicators from the global economy have been positive. These positive trends, together with a more competitive value for the Indian rupee, have helped Indian exports to recover. At home, we have been fortunate to have had a good monsoon in 2013 so that a substantial recovery can be expected in agricultural growth, leading to better demand for goods and services from rural India.
With a turnaround in the rural economy and in exports, certain sectors are already seeing an improvement in performance. But for a stronger recovery to take place, what is really required is a pickup in the investment scenario. The industrial sector has been plagued by a downturn in investments due to delays in clearances of projects in key sectors such as mining, power, roads and railways.
What gives me a lot of hope about 2014 is that some of these pending issues are getting resolved after government constituted the Cabinet Committee on Investments (CCI). The Project Monitoring Group (PMG) set up in June 2013, to anchor CCI, has resolved over 120 projects worth over Rs 4,00,000 crore (around $67 billion). Of these, approximately 67% are in the power sector. These decisions to revive stalled projects are likely to bear fruit within the coming year. In fact, some pickup in construction activity is already evident in the second quarter GDP numbers, indicating a positive outlook for the investment cycle.
Another positive development has been the compression in our current account deficit, which had become a major cause for concern. Although our imports have moderated following the depreciation in our currency, we now need to ensure that imports do not increase again with a recovery in the economy. In particular, we need to ensure that imports of gold and oil do not keep increasing. These two items account for roughly 35% and 11% respectively of our total imports.
In case of oil, removal of subsidies on the use of fuel products and greater use of alternative energy sources would keep demand under control. For gold, the key would be to develop savings instruments that provide good returns and therefore control rising demand for gold.
Even as the worst seems behind us, we must not forget challenges that we will continue to face in the coming year. Any new government must quickly address some of the policy concerns. News on the inflation front has been discomforting, reflecting enormous difficulties for the common man. Any new government will have to seek much greater investment in the food sector, especially in marketing and distribution perishables. Indian agriculture needs accessible and well-maintained infrastructure including water and power supply. Better infrastructure together with reforms such as elimination of restrictions imposed by the APMC Act could significantly improve agriculture`s growth potential."
- Economic Times
In terms of potential growth, that is always hard to answer at a time when the cycle is trending lower or upwards. India's structural strength remains the same. It has high savings rate. It has a relatively high investment rate even now, compared to other countries with similar ratings. It has a very agile private sector that is quite dynamic and has proven itself to be able to withstand shifts up and down in business cycles, but India has structural weaknesses which are manifesting in poor infrastructure, in a regulatory process that is not always certain and both the strengths and the weaknesses have remained largely the same over the last few years.
- Atsi Sheth, VP-Sovereign Risk Group, Moody's
Apologies in case i had caused any confusion but my intention was again to pin point the fundamental chief points..
