After several years of rapid growth, 2009, will prove a testing year for India.
Inflation Inflation continues to pose a threat. Inflation peaked at 12% in early August ’08. Inflation, is being caused by rapid growth (demand pull factors) but, also the cost push inflation factors (rising oil prices). Hopefully, the fall in oil prices and higher interest rates will reduce inflation without causing too much of a slowdown.
Economic Growth. After reaching growth of 9.8% in 2007/08, growth is expected to slow down to 7%. This might not be a bad thing as it will avoid inflationary pressures building further. However, some worry the global credit crunch could reduce growth much more.
Global Recession and Indian Economy. It appears that Europe, Japan and the US are entering into recession. Falling house prices, crisis in the financial system, and lower confidence could lead to a sharp downturn, with the worst still to come.
Many argue, that India’s growth is not so dependent on growth in the West. However, the Indian stockmarkets have been hit by the global crisis. India’s growing service sector and manufacturing sector would be adversely impacted by a global downturn. However, I still feel that India’s economic success is not dependent on growth in the West, and at worst India’s growth rate will be less than hoped for.
The Indian government still have a target of 10% growth for 2010/11, but, I think this could prove unrealistic.
Challenges for Indian Economy in 2009
- Getting inflation under control
- Spreading the benefits of growth more equitably.
- Completing investment projects which are essential for long term development of economy.
- Dealing with global financial uncertainty, which will make capital flows and exports more difficult.
Sensex in 2009
After falling in 2008, the Sensex could offer one of the best returns for global stockmarkets. India’s strong economic growth will buck the global trend for lower growth.
Indian Rupee 2009
The Indian Rupee has had a surprisingly weak year. The Rupee has fallen from 39 Rupee to 1$ in January 2008, to 44 Rupee in September. Real interest rates in India are still negative, but, if the Indian inflation rate is reduced, and the government resist the temptation to go all out for growth, the Rupee may rebound, at least against the dollar, which will face more difficulties in 2009
Indian Economy 2010
More on Indian Economy
- Indian economy set to grow despite downturn – Indian Reuters
- Indian economy – wikipedia
- Problems facing Indian economy
About The Author
India need to look forward.Its present economic condition is sinking rapidly.The leaders of our country really need to pay more attention in improving our nation,so that no one dares to call us a third world nation than filling their own pockets.
oh my god
india economy is best economy of the whole world
It appears that indian economy can sustain this recession and will emerge as a good marker among all big nation like US /Europe
The stimulus package by various governments has lead to the increase in the external borrowings and thereby has widen the fiscal deficit of all the countries. The Indian growth is mostly in the service sector, so should have less relied on the stimulus package i.e., less external borrowings, thereby less inflation. The basis of my say is, since the stimulus offered to the Bank in the western countries has lead to more funds moving in the stock market of emerging markets like India / China / Philipphine. This will indirectly create inflation effect especially on the realty market. The government should rely less on the borrowing and try to put more regulation on the government spendings instead of puting more regulation on the private players.
INDIA IS BETTER POSITION IN THIS TIME
The Indian economy is so bad because of inflation. India is the only country thats even close to China in population. The weird part is Indias a democracy.