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WHAT'S WRONG WITH 6% GDP GROWTH?

Swaminathan S Anklesaria Aiyar

The Economic Times, March 11, 2009

Five years (2003-08) of near-9% growth suddenly seems a distant memory. The CSO estimated GDP growth in October-December 2008 at just 5.3%.

Indeed, the IMF estimates that India will average just 5.1% growth in the calendar year 2009. There is much gloom and doom in the stock market, which has now fallen below its October-November lows. The government claims bravely that its stimulus packages are finally having an impact, but this is not reflected in the mood of corporates or households.

Maybe growth in 2009 will be 6%, a tad higher than the IMF estimate. But it may not get much faster till the world economy recovers, and that may not happen till 2010 or even 2011. If so, India will grow at just 6% annually for the next two years.

Some experts ask, what’s wrong with 6% growth? Why are we whining and groaning? After all, 6% growth will represent the fastest growth rate in the world after China’s. If India can grow at 6% when the US has just plunged downward by 6%, why not enjoy the spectacle? One consulting firm says that it scents trouble in only one of six verticals of its business. Why then is so much gloom and doom?

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