News / Asia

India’s Economy Looks to Rebound in 2013

An Indian laborer carries a bag full of potatoes at a warehouse in Jammu, India, July 31,2012.
An Indian laborer carries a bag full of potatoes at a warehouse in Jammu, India, July 31,2012.
Anjana Pasricha
— India’s economy has experienced its worst slowdown in nearly a decade this year. But there are signs that the country, which is still among the world’s fastest growing economies, may soon begin to recover from the slump.

Month after month in 2012, virtually every sector of the Indian economy - agriculture, mining, manufacturing and services - slowed. At the end of the year, economic growth stood at 5.3 percent.  

It was a huge disappointment for a country whose economy had been racing ahead at eight percent plus for the last eight years.
        
Like many other countries, India was affected by the global slowdown as exports were hit. But several domestic factors also pulled down the economy.
 
Many economists blamed the government, which faces allegations of graft in many spheres, for policy inaction.

Chief economist at ratings agency, CRISIL in Mumbai, D.K. Joshi, says the downturn was sharper than warranted by global factors.  
   
“It is widely recognized now, to clear projects it is taking time because of governance issues. And when it takes time to clear projects, the investment pipeline gets choked," says Joshi. "As a result of that investment slowed down quite significantly. Then we also had high inflation regime, and high inflation means the Central bank cannot cut interest rates to perk up the economy.”
 
The government admits that investment is critical to revive the economy. Faced with plummeting growth, it has taken some steps to liberalize the economy and make it easier for foreign businesses to pump money into sectors such as retail, aviation and insurance. The long-awaited reforms were the biggest initiated in nearly ten years. Authorities also promised to speed up clearances for large infrastructure projects.

The government also announced spending cuts as it grappled with high deficits. It slashed subsidies on fuel despite political opposition. This is expected to ward off the threat of a credit rating downgrade.

Economist N. Bhanumurthy with the National Institute of Public Finance and Policy in New Delhi, says these steps are meant to reassure investors and could help the economy stage a gradual recovery.    

“Frankly right now the most important issue is confidence among investors, both domestic and foreign. All these measures are expected to provide some kind of confidence-booting measures for revival in the economy." he said. "Our own projections for the next year, 2013-14, is 7.1 percent.”

 
Prime Minister Manmohan Singh has said the government’s first priority is to reverse the slowdown. But he says that a return to eight percent growth is an ambitious goal.
 
Despite the slowdown, India remains high on the radar of foreign investors.

You May Like

Is Air Travel Safe?

Aviation expert says despite tragic losses of Malaysian Airlines flights 370 and 17, industry experienced lowest fatality rate in recorded history last year More

Multimedia 100 Days Later, Nigerian Girls Still Held

Activists holding rallies in Nigeria and several other countries to mark 100th day of captivity for more than 200 schoolgirls being held by Boko Haram More

Chocolate Too Bitter? Swap Sugar for Mushrooms

US food technology company develops fermentation process using mushrooms to reduce bitterness in cocoa beans, believes it will cut sugar content in candy More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Carriers Suspend Travel to Israeli
X
Carolyn Presutti
July 23, 2014 1:21 AM
The United States is prohibiting American carriers from flying to Israel's airport in Tel Aviv for 24 hours, because of rising violence between Israel and Hamas militants. The action was announced on Tuesday, after a rocket fired by Hamas militants in the Gaza Strip landed near the airport. As VOA's Carolyn Presutti tells us, international officials soon may have to determine which combat zones are too dangerous for commercial flights.
Video

Video US Carriers Suspend Travel to Israel

The United States is prohibiting American carriers from flying to Israel's airport in Tel Aviv for 24 hours, because of rising violence between Israel and Hamas militants. The action was announced on Tuesday, after a rocket fired by Hamas militants in the Gaza Strip landed near the airport. As VOA's Carolyn Presutti tells us, international officials soon may have to determine which combat zones are too dangerous for commercial flights.
Video

Video NASA Focuses on Earth-Like Planets

For decades, looking for life elsewhere in the universe meant listening for signals that could be from distant civilizations. But recent breakthroughs in space technology refocused some of that effort toward finding planets that may harbor life, even in its primitive form. VOA’s George Putic reports on a recent panel discussion at NASA’s headquarters, in Washington.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video Relic of Saint Draws Catholics Worried About Immigration Issue

A Roman Catholic saint who is a figure of devotion for those crossing the border into the United States is attracting believers concerned about the plight of undocumented immigrants. Mike O'Sullivan reports from Los Angeles, where a relic of Saint Toribio has drawn thousands to local churches.
Video

Video US Awards Medal of Honor for Heroics in Bloodiest of Afghan Battles

U.S. combat troops are withdrawing from Afghanistan, on pace to leave the country by the end of this year. But on Monday, U.S. President Barack Obama took time to honor a soldier whose actions while under fire in Afghanistan earned him the Medal of Honor. VOA's Jeff Seldin has more from the Pentagon.
Video

Video Ukraine Rebels Surrender MH17 Black Boxes

After days of negotiations, a senior separatist leader handed over two black boxes from an airliner downed over eastern Ukraine to Malaysian experts early Tuesday. While on Monday, the U.N. Security Council unanimously demanded that armed groups controlling the crash site allow safe and unrestricted access to the wreckage.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.
Video

Video Nature of Space Exploration Enters New Age

Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.

AppleAndroid