Growth Rate of the Indian Economy Slowest in Ten Years.

According to the Finance Ministry of India, it expects the growth rate of India to slightly increase in the second half of the financial year, which will end in March 2013.

However the GDP will increase by 5.7 per cent to 5.9 per cent per year. This is lower than the forecast made earlier of 7.6%. Recently reforms have been introduced in India to at5tract foreign investment especially in the retail sector, however if the current trend continues then the nation will have to do a lot more to return to the bright days of a double-digit growth rates which were witnessed in the past years.

Due to a sharp decline in exports, the growth rate in India has been declining and higher interests rates and slower pace of reforms have contributed to dampen the business sentiment and resulted in stalled investments.

This revised forecast is in accordance with the rates predicted for the nation by IMF, which were decreased in October due to a weaker external environment and strains on the business sentiment and investment.

Currently the Reserve Bank of India (RBI) has been reluctant of lowering the interest rates; however the economists believe that the lower inflation rate could facilitate the easing of the monetary policy in the beginning of 2013. AT the same time India is trying hard to keep a control over borrowing. At the same time it is also trying to slash the subsidies and sell the stakes in many government owned firms.

These measures are an attempt to limit the budget deficit to 5.3% of the GDP in the fiscal year 2012-20113. The second most populous nation of the world has successfully managed to maintain a double digit growth rates and is predicted to be the largest economy of the world by 2050.


Source : thepointdaily.com