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India's Third Giant Leap
This Could be One of the Biggest Opportunities for Investors
- Home
- Todays Market
- Indian Stock Market News February 8, 2013
Only 5% GDP growth for India Fri, 8 Feb Pre-Open
India really seems to be in dire straits. According to government statisticians, the Indian economy is expected to grow by only 5% in the year to 31 March 2013. This is versus a 6.2% GDP growth seen last year. This revised figure comes in significantly lower than the consensus estimate of around 5.5%. This current estimate is worse than all other projections made by the Reserve Bank of India (RBI) or the government and is the slowest growth the Indian economy would have seen since 2002-03.
So what does this 5% mean? Well, this number is more in line with reality according to Rupa Nitsure, chief economist at Bank of Baroda. The industrial sector has been facing a downturn for a long time and the manufacturing output has been negative for the first half of the year. Exports have been slowing on account of the weak global environment, credit growth has declined , and agricultural performance has also been weak.
The muted estimate for FY13 also means that the pace of economic expansion has slowed sharply in the second half of the year. This is given that GDP growth in the April-September period stood at a more respectable 5.4%. Thus, the indication is that the economy may grow at 4.6% in the second half of the year. The agriculture sector is expected to grow at 1.8% compared with 3.9% in the previous year, while manufacturing growth is projected to slow to 1.9% from 2.7% earlier. Lower estimates on the service sector side are contributing to lower overall growth. According to the advance estimates, the services sector, including finance, insurance, real estate and business services sectors, is likely to grow by 8.6% this fiscal year against 11.7% earlier.
The RBI cut policy rates by 0.25% in order to spur growth in the Indian economy. However, structural reforms are key for India's growth to come back to erstwhile levels. While the government has taken some corrective action, still a lot more needs to be done. According to the International Monetary Fund (IMF), it will take India tough decisions and several years to get back on its earlier growth trajectory of 8% and above. Labour laws, the land acquisition bill and GST implementation still need to happen, supply bottlenecks need to be cleared and corruption needs to be weeded out. Once these are in place, India can be back on track.
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sethu
Feb 8, 2013once these are in place is the KEY;Will these be ever in India.I have serious doubts;