News / Asia

India’s Economic Growth Slips to 3-Year Low

An Indian laborer carries a bag of potatoes at a warehouse in Jammu, India, July 31, 2012.
An Indian laborer carries a bag of potatoes at a warehouse in Jammu, India, July 31, 2012.
Anjana Pasricha
NEW DELHI — Economic growth in India has slipped to a three-year low, confirming a sharp slowdown in Asia’s economy.
 
The 5.5 percent economic growth from April to June was slightly higher than in the previous three months. But it brought no cheer to a country where the economy has stalled in recent months.

Virtually all sectors such as manufacturing, services and agriculture posted slower growth compared to the same period last year, said Dharmakirti Joshi, chief economist at ratings agency CRISIL in Mumbai.   
 
“The investment growth is close to zero, the private consumption has slowed down materially and if you look at exports, the external demand, that also is beginning to slow down,” Joshi said.
 
While India has been affected by the global slowdown, economists say domestic factors are largely responsible for the plummeting growth.
 
They say one of the main worries centers around persistently high inflation and high interest rates, which have hit consumption -- the main driver of India’s growth.  
Another key concern is that economic reforms continue to be stalled due to a political impasse. The government, embroiled in a number of corruption scandals, has been on a collision course with opposition parties. As a result, key legislation, which could revive the economy, is stuck in a deadlocked parliament.     
 
The policy paralysis has unnerved investors. In recent months, a number of domestic and foreign businesses have put investment plans on hold. The government admits restoring investor confidence could be key in determining how the economy fares.
 
The Deputy Chairman of India’s Planning Commission, Montek Singh Ahluwalia, is optimistic and hopes for a rebound in coming months.  
 
“A lot will depend really on what happens to the level of investment, both public sector investment and of course private investment," he said. "I think it is most likely in the second half of the year that investment intentions will begin to change.”   
 
Taking note of the sagging economy, Prime Minister Manmohan Singh appointed a new finance minister a month ago, and there are hopes that he will take steps to address concerns of investors.  
 
The government estimates that the economy will grow by 6.8 percent this fiscal year. But most analysts project much lower growth of around 5.5 percent.  
 
That is a huge disappointment for a country which just a year ago, was hoping to hit double digit growth, and which has been widely described as an engine to revive the global economy.

You May Like

Sydney Hostage-taker Failed to Manipulate Social Media

Gunman forced captives to use personal Facebook, YouTube accounts to issue his demands; online community helped flag messages, urged others not to share them More

UN Seeks $8.4 Billion to Help War-Hit Syrians

Effort aimed at helping Syrians displaced within their own country and those who've fled to neighboring ones More

Who Are the Pakistani Taliban?

It's an umbrella group of militant organizations whose objective is enforcement of Sharia in Pakistan 'whether through peace or war' More

This forum has been closed.
Comment Sorting
Comments
     
by: Mike from: California
September 02, 2012 1:56 PM
According to what I read in The Economist, India has the most stifling and bureaucratic government in the world. It takes years to get permits for building, months or years to get through the courts, and a rigid social structure designed to "keep people in their place." It is quite sad but it does work to the advantage of the ruling class to maintain a society of special privilege. But India does have oportunities and I hope it sees them.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Putin: Russian Economy to Rebound in 2 Yearsi
X
December 18, 2014 5:13 PM
Russian President Vladimir Putin held his annual end-of-the-year news conference Thursday, tackling questions on the Russian economy, the crisis in Ukraine and Russian relations with the west. VOA's Jeff Custer reports.
Video

Video Putin: Russian Economy to Rebound in 2 Years

Russian President Vladimir Putin held his annual end-of-the-year news conference Thursday, tackling questions on the Russian economy, the crisis in Ukraine and Russian relations with the west. VOA's Jeff Custer reports.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Detained Turkish Journalists Follow Teachings of US-Based Preacher

The Turkish government’s jailing of critical journalists has sparked international condemnation and is being seen as an effort to undermine the followers of an ailing Turkish preacher based in the United States. VOA religion reporter Jerome Socolovsky has more.
Video

Video Will Pakistan School Shooting Galvanize Pakistan Against Extremism?

The attack on a military school in Pakistan’s northwest city of Peshawar left 141 dead, including 132 children. Strong statements of condemnation poured in from across the world. The country announced three days of mourning, and the leadership, both political and military, promised retribution. VOA's Ayesha Tanzeem looks at how likely the Pakistani government is to clamp down on all extremist groups.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.
Video

Video Turkey's Authoritarianism Dismays Western Allies

The Turkish government has been defiant in the face of criticism at home and abroad for its raids targeting opposition media. The European Union on Monday expressed dismay after President Recep Tayyip Erdogan lashed out at Brussels for criticizing his government's action. Turkey's bid to be considered for EU membership has been on hold while critics accuse the NATO ally of increasingly authoritarian rule. Zlatica Hoke reports.

All About America

AppleAndroid