News / Economy

India Hopes for Financial Revival

An Indian vegetable vendor counts rupees at a vegetable wholesale market in Allahabad, India, Nov. 21, 2013.
An Indian vegetable vendor counts rupees at a vegetable wholesale market in Allahabad, India, Nov. 21, 2013.
Anjana Pasricha
— India is hoping for a financial revival after economic growth slipped to decade-low levels in the last two years.  But there are few signs of a return of the robust growth that catapulted India into the ranks of the world's fastest growing economies.

Gurdet Singh, who farms about 100 acres of fertile land in Wazidpur village in northern Punjab state, a prosperous agricultural region, plans to buy a bigger, new tractor to ease his work on the farm.

He says his two tractors have become old and require a lot of repair.  Singh even hopes to buy a car after he pays off the loans for the tractor.

The automobile sector, which witnessed a huge slowdown in the last two years as the economy slumped to a decade low, is pinning its hopes on consumers like Singh in the country’s vast rural areas.

Vishnu Mathur, who heads the Society of Automobile Manufactures of India, says that while demand in urban areas for passenger cars continues to be sluggish, the upbeat rural economy provides a silver lining.

“The recession we have been seeing is largely an urban phenomenon," Mathur noted. "The monsoons have been good and the harvest season is now round the corner, so if we have a good harvest, then I am sure there will be a further buoyancy coming out of the rural market.”
       
The optimism in the automobile industry signals that the worst could be over for the Indian economy, which is expected to clock growth of less than five per cent  when the 2013 fiscal year ends in March.  
 
Experts are pointing to the so-called “green shoots.” The farm sector, which sustains two thirds of the country, has posted healthy growth. The rupee, which lost more than 20 per cent of its value versus the dollar last year, has recovered some ground and stabilized.  Exports have revived.

Rafique Ahmed, head of the Federation of Indian Export Organizations, says exports are being boosted by a cheaper rupee and better global economic conditions.

“The prospects are good. Our rupee has helped us," Ahmed said. "Secondly the market also has stabilized in Europe and America and even in ASEAN (Association of South East Asian Nations) countries it is better. So, exports should grow in a positive tone…slowly it will come to double digit.”

But even as growth is widely expected to pick up from the low point it hit last year, economists say it is unlikely to climb back to the heady numbers which had put India among the world’s fastest growing economies. Just three years ago (2011), India’s economy expanded by more than nine per cent.
 
Now the expectations are much more modest. Finance Minister P. Chidambaram has said growth will accelerate to more than six per cent in 2014, and return “step-by-step” to its potential of eight percent.

Economists say the key to boosting India’s economy is to revive confidence among investors, both domestic and foreign. Worried by lack of reforms and bureaucratic roadblocks, private investment has reduced to a trickle. Most businesses are now waiting on the sidelines for the outcome of national elections to be held by May.
 
Chief economist at credit ratings company, CRISIL, in Mumbai, D.K. Joshi, says the pace of economic recovery critically hinges on the outcome of those polls.

“If you get a fragile mandate and a coalition of not so like minded people, under these conditions sustaining high growth is very difficult," Joshi explained, "and if you get a decisive mandate and you get one single political party who is able to push the projects much faster, it will lift the sentiment of the private sector.  If those things happen, we do believe growth can lift to a little over six and a half percent.”

The decade-long spell of high growth which India experienced until 2011 had catapulted millions of people into the middle class and created new jobs which the country needs for its huge, young population. But economists are not so sure that India can achieve that again.

You May Like

At Khmer Rouge Court, Long-Awaited Verdict Approaches

First phase of trial, which is coming to an end, has focused on forced exodus of Phnom Penh in 1975 - and now many are hopeful justice will be served More

Video When Fighting Eases, Gazans Line Up at Bakeries

When there is a lull in the conflict, residents who have been hunkered down in their apartments rush out to stock up on food and other necessities More

Video Information War Rages Alongside Real One in Ukraine

Downing of Malaysian airliner, allegations of cross-border shelling move information war in war-torn country to a new level More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Information War Rages Alongside Real One in Ukrainei
X
Al Pessin
July 31, 2014 8:13 PM
The downing of the Malaysian airliner two weeks ago, and allegations that Russians are shelling Ukrainian troops across the border, have moved the information war swirling around the Ukrainian conflict to a new level. VOA's Al Pessin reports from Kyiv.
Video

Video Information War Rages Alongside Real One in Ukraine

The downing of the Malaysian airliner two weeks ago, and allegations that Russians are shelling Ukrainian troops across the border, have moved the information war swirling around the Ukrainian conflict to a new level. VOA's Al Pessin reports from Kyiv.
Video

Video When Fighting Eases, Gazans Line Up at Bakeries

When there is a lull in the conflict in Gaza, residents who have been hunkered down in their apartments rush out to stock up on food and other necessities. Probably the most important destination is the local bakery. VOA’s Scott Bobb reports from Gaza City.
Video

Video US-Funded Program Offers Honduran Children Alternative to Illegal Immigration

President Obama and Central American leaders recently agreed to come up with a plan to address poverty and crime in the region that is fueling the surge of young migrants trying to illegally enter the United States. VOA’s Brian Padden looks at one such program in Honduras - funded in part by the United States - which gives street kids not only food and safety but a chance for a better life without, crossing the border.
Video

Video 'Fab Lab' Igniting Revolution in Kenya

The University of Nairobi’s Science and Technology Park is banking on 3-D prototyping to spark a manufacturing revolution in the country. Lenny Ruvaga has more for from Nairobi's so-called “FabLab” for VOA.
Video

Video Gazans in Shelled School Sought Shelter

Israel's air and ground assault against Hamas-led fighters in Gaza has forced many Palestinians to flee their homes, seeking safety. But safe places are hard to find, as VOA’s Scott Bobb reports from Jabaliya.
Video

Video Rapid Spread of Ebola in West Africa Prompts Global Alert

Across West Africa, health officials are struggling to keep up with what the World Health Organization describes as the worst ebola outbreak on record. The virus has killed hundreds of people this year. U.S. President Barack Obama and other world leaders are watching the developments closely as they weigh what actions, if any, are needed to help contain the disease.
Video

Video Michelle Obama: Young Africans Need to Embrace Women's Rights

U.S. first lady Michelle Obama urged some of Africa's best and brightest to advocate for women's rights in their home countries. As VOA's Pam Dockins explains, Obama spoke to some 500 participants of the Young African Leaders Initiative, a six-week U.S.-based training and development program.
Video

Video Immigrant Influx on Texas Border Heats Up Political Debate

Immigrants from Central America continue to cross the U.S.-Mexico border in south Texas, seeking asylum in the United States, as officials grapple with ways to deal with the problem and provide shelter for thousands of minors among the illegal border crossers. As VOA's Greg Flakus reports from Houston, the issue is complicated by internal U.S. politics and U.S. relations with the troubled nations that immigrants are fleeing.
Video

Video Study: Latino Students Most Segregated in California

Even though legal school segregation ended in the United States 60 years ago, one study finds segregation still occurs in the U.S. based on income and race. The University of California Los Angeles Civil Rights Project finds that students in California are more segregated by race than ever before, especially Latinos. Elizabeth Lee reports for VOA from Los Angeles.

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.