At a time when most countries around the world are witnessing the worst slump in more than six-decades, India is still growing at the fastest pace after China. Though we are not able to continue with the 9% plus growth rate as seen in the last three years, a 6% plus kind of a growth is very impressive considering the difficult times the global economy is going through. Indian economy grew 5.8% annually in the final quarter of fiscal year 2008-09, which is much better than expected. To make it sound better, the third quarter growth has been revised upward to 5.8%, from 5.3% estimated earlier, taking the overall growth rate to a respectable 6.7% for the whole year.
Now, this is not the end of it. This gives birth to a very important question. And that question is weather the worst is over for the Indian economy. Let me park this question for a while and put some facts about the global economy first. Well, I may sound a tad harsh to say that the global economy is poised to see an excruciating year ahead. No matter how much we speak about the signs of economic revival globally, the fact is that the job losses haven’t stopped yet. International trade has seen a nose dive in last 8 months, forcing units to halt production, more job losses, further slump in consumer demand, leading to even lesser trade... more job losses... It’s a vicious circle. The global economy needs to come out of that and it doesn’t happen over night. So the global economy is here to face the worst recession since my grandfather was born.
Hmmm, after all that gloomy tour of the world economy, let’s come back to India. Well, I feel proud to say that it seems that the worst is over for the Indian economy. And there are umpteen reasons why it seems so. The first reason is that India is not an exports driven economy. Exports contribute merely 13.5% to India's overall GDP whereas Chinese exports contribute more than 35% to its GDP.
Hmmm, after all that gloomy tour of the world economy, let’s come back to India. Well, I feel proud to say that it seems that the worst is over for the Indian economy. And there are umpteen reasons why it seems so. The first reason is that India is not an exports driven economy. Exports contribute merely 13.5% to India's overall GDP whereas Chinese exports contribute more than 35% to its GDP.
At the domestic front, consumer demand has improved significantly in the month of Aril and May. At a time when urban demand slowed down in the wake of financial crisis, buoyant demand from rural India provided the necessary fuel to India inc’ to weather economic slump. Be it auto-mobile or cement industry, sales have gone up in last two months. Passenger car sales rose over 4% (y/y) in April, following 1% rise in March. Cement dispatches have also been robust in last two months. Steel and electricity have not been behind either. The telecom sector has been adding 10 million plus mobile subscribers to its kitty and will soon cross the 400 million mark as the total subscriber base. FMCG sector has seen around 15% growth in last quarter. So it’s the rural India which has kept the Indian flag high in the sky.
On top of everything else, the best thing that happened to India is the unexpected outcome of the general election. Beating expectations of a hung parliament, which could have been a bizarre for Indian economy, Indian people have given a decisive mandate to the Congress-led UPA. Our Prime Minister Dr. Manmohan Sing has said that he will fix the economy in 100 days, and I don't doubt his capabilities seeing his proven track record.
All these factors suggest that India has managed to jump out of the lurch. The fiscal bill for the current financial year, which is expected in the first week of July, could also though some positive surprises for the Indian economy. Therefore, I can afford to say that the worst is over for Indian economy and we are heading towards a whopping 10% growth rate somewhere around fiscal year 2012. So what are you waiting for? Cheer up!
Posts
