For years, ever since the UPA came to power - and even before that when NDA ruled - PMs and FMs have espoused that India’s is the next growth story.
But first, a quick summary of the economic growth story. The February 2008 IMF India Assessment report mentioned that “over the past five years, average growth of 8¾% has made India one of the world’s fastest growing economies.” The report addsed that inflation has “remained contained,” current account deficits have been at a moderate level, factors which, as per IMF, “pay tribute to India’s sound macroeconomic policies and past structural reforms.” Although India’s growth rates have remained high, they have been relatively subdued – if we can call it that – in recent quarters. India’s GDP grew by a smashing 9.3% in Q1 2007-08 (but it was lower than 9.6% in Q1 2006-07). In Q2 2007-08, it was even lower at 8.9% (compared to 10.2% in Q2 2006-07). The IMF forecast for India’s GDP growth in this fiscal is 8.75%. Subir Gokarn, Chief Economist, Standard & Poor’s, Asia Pacific, told B&E, “India’s GDP growth is expected to be 8.6% during FY 2007-08.” Dharmakriti Joshi, Director and Principal Economist, Crisil, commented, “We expect the GDP growth to moderate further in 2008-09... to a little over 8%.” The cumulative GDP figure at current market prices at the end of Q2 2007-08 had reached $1.09 trillion. Interestingly, while India’s GDP – in PPP terms – in FY 2006-07 was $3.8 trillion, the World Bank downgraded it by 38% in January 2008 (quoting recalculation using a new methodology) to $2.34 trillion.
Comparatively, the manufacturing sector – as per RBI Q3 review – recorded “a lower growth of 9.8% during April-November 2007, as compared to 11.8% during April-November 2006.” Dr. Dalip Kumar, Consultant, NCAER, revealed, “Non-farm activities, manufacturing and services... are either slowing down or just maintaining their trajectory of growth.” RBI itself accepts that the slowdown is due to “decelerated/negative growth in 11 out of the 17 manufacturing industry groups”; the 11 sectors account for a whopping 49.3% weight in the Index of Industrial Production (IIP). Frankling Templeton, though, does mention in its January 2008 ‘Market Snapshot’ that “the composition of IIP hasn’t changed to reflect new economic drivers and sectors; and the government is expected to introduce a new index with... new weights and a wider basket of items.”
But first, a quick summary of the economic growth story. The February 2008 IMF India Assessment report mentioned that “over the past five years, average growth of 8¾% has made India one of the world’s fastest growing economies.” The report addsed that inflation has “remained contained,” current account deficits have been at a moderate level, factors which, as per IMF, “pay tribute to India’s sound macroeconomic policies and past structural reforms.” Although India’s growth rates have remained high, they have been relatively subdued – if we can call it that – in recent quarters. India’s GDP grew by a smashing 9.3% in Q1 2007-08 (but it was lower than 9.6% in Q1 2006-07). In Q2 2007-08, it was even lower at 8.9% (compared to 10.2% in Q2 2006-07). The IMF forecast for India’s GDP growth in this fiscal is 8.75%. Subir Gokarn, Chief Economist, Standard & Poor’s, Asia Pacific, told B&E, “India’s GDP growth is expected to be 8.6% during FY 2007-08.” Dharmakriti Joshi, Director and Principal Economist, Crisil, commented, “We expect the GDP growth to moderate further in 2008-09... to a little over 8%.” The cumulative GDP figure at current market prices at the end of Q2 2007-08 had reached $1.09 trillion. Interestingly, while India’s GDP – in PPP terms – in FY 2006-07 was $3.8 trillion, the World Bank downgraded it by 38% in January 2008 (quoting recalculation using a new methodology) to $2.34 trillion.
Comparatively, the manufacturing sector – as per RBI Q3 review – recorded “a lower growth of 9.8% during April-November 2007, as compared to 11.8% during April-November 2006.” Dr. Dalip Kumar, Consultant, NCAER, revealed, “Non-farm activities, manufacturing and services... are either slowing down or just maintaining their trajectory of growth.” RBI itself accepts that the slowdown is due to “decelerated/negative growth in 11 out of the 17 manufacturing industry groups”; the 11 sectors account for a whopping 49.3% weight in the Index of Industrial Production (IIP). Frankling Templeton, though, does mention in its January 2008 ‘Market Snapshot’ that “the composition of IIP hasn’t changed to reflect new economic drivers and sectors; and the government is expected to introduce a new index with... new weights and a wider basket of items.”
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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