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

UN Watchdog Urges Israel to Probe Possible Gaza War Crimes

More than 2,100 Palestinians, most of them civilians, were killed in a 51-day war in Gaza, along with 67 Israeli soldiers and six civilians in Israel More

New Kenyan 'Thin SIMs' Poised to Transform African Mobile Money

Equity's new technology is approved in African nation for one-year trial, though industry leader Safaricom says thin SIMs could lead to data theft and fraud More

Solar's Future Looks Brighter

New technology and dropping prices are contributing to a surge in solar power More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Talks to Resume on Winter Gas for Ukrainei
X
Al Pessin
October 25, 2014 4:21 PM
Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Talks to Resume on Winter Gas for Ukraine

Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.

All About America

AppleAndroid