Double digit growth: Dream or reality?

Mon, 7 May Pre-Open

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These days the media seem to be filled with all negative news as far as growth in the Indian economy is concerned. Most of the industry experts are increasingly painting the grim image of the future. True, the county has witnessed a slower growth during the last financial year 2011-12. And, it may not be able to witness a high growth during the current fiscal FY13. However, now experts have started lowering down the long term growth rate of the country as well. They do not see India growing at double-digit pace in the future.

Why are they thinking like this? Simply, because all the economic indicators that we are used to see to gauge the financial health of a country are not in the good shape at the present moment. India is still battling with high inflation. Chances of monetary easing do not look bright considering the expected high petroleum prices and stubborn food prices. Then, the country is in the state of policy paralysis. The political and corporate landscape is abuzz with corruption news. In the last fiscal year, the country has missed its budgeted fiscal deficit target by a huge margin. And for FY13, the situation looks equally bleak on the deficit front. High crude prices would only increase the trade deficit. And all these negatives seem to be the reasons for the bleak projections by the experts.

However, look deeper and you may find something to think differently. First let's take politics. The Indian voters are no longer in a mood to vote on the basis of caste and religion. They are looking for development. Bihar is a good testimony for the same. Uttar Pradesh has voted for a young leader who they expect can put the state on the development path. This is a clear sign that people of India are thinking differently. They are aiming for a better future.

Then on policy issues, reforms have been on a slower pace for long. But issues such as new land acquisition bill and consensus building on Goods and services tax (GST) seem to be on the right path. State governments are raising their tax efforts. Investments in infrastructure and power are happening. Though there are delays in the project executions due to inadequate fuel supply arrangements and clearances. However, with the increasing power generation capacity, rural landscape would start contributing more to the growth of the country.

And not to forget, with the financial and economic crises in the developed world, high inflation and tight monetary environment, corruption and policy paralysis, India managed to have nearly 7% growth during FY12. With the improvement in all the parameters, days of better growth cannot be ruled out.