The Indian economy has survived the global turmoil, and is now looking to consolidate its position as one of the few countries with a positive GDP growth rate that is driven by domestic consumption.
The Equity markets went into overdrive after a 'positive' election result, and the FIIs who were panic selling in March 2009, are now re emerging from the rubble with buy recommendations of various stocks!
While I'm not doubting India's positive long term prospects, there is clearly a lot of work to be done. As Jim Rogers recently said Indian politicians are big on promises, but execution quite often disappoints.
This brings me to a newspaper clipping from the Times of India, Mumbai, June 4, 2009. I have no idea of the accuracy of the survey undertaken, but I will say that irrespective of the political party in government, bureaucracy and red tape have always been major stumbling blocks!
India has tremendous potential - a hard working population, strong and growing household savings, and increasing levels of literacy albeit at a slow pace.
Unfortunately, if we do not clean up our act soon enough, we will continue to suffer from 'non inclusive growth', unfulfilled potential and a growing rural - urban divide.
COMING TO THE INDIAN GDP
Well the numbers look impressive (lets not forget we are battling a global slowdown!)
Here's a closer look -
Sectors like manufacturing and construction are slowing down.
Funding issues have started to stress expansion projects across sectors as companies have turned to conserving cash and paying down debt.
The figures of the recent quarters have been positively impacted by government stimulus packages ( reflected by rising government expenditure) as well as a sixth pay commission pay hike for government employees.
As the government looks to control its deficit in the upcoming budget, some subsidies and recent stimulus incentives may have to be rolled back, given that tax collections are expected to decline.
It's a wait and watch game for now, and the second half of 2009 looks as challenging as ever!