INDIA AGAINST THE TIDE

INDIA YET TO REVERT TO 9% GROWTH

The tide of the global economy has again turned to anti-growth in general

Indivjal Dhasmana

Business Standard, September 14, 2012

Lehman Brothers’ collapse broke off India’s brief run of nine per cent economic growth a year — from 2005-06 to 2007-08. The journey to high growth, snapped in 2008-09, was partly restored next year when the economy grew 8.4 per cent against 6.7 per cent a year ago. However, it came with a cost to the exchequer. Fiscal deficit, targeted to fall to three per cent of gross domestic product (GDP) during 2008-09, rose to six per cent that year.

As economic expansion dipped to 5.8 per cent in the third quarter of 2008-09, the government rushed to facilitate growth. It cut excise duty and service tax and increased public expenditure. This cost the exchequer Rs 1.67 lakh crore more, doubling the fiscal deficit from budget estimates as a proportion of GDP.

The tide of the global economy has again turned to anti-growth in general. From a banking crisis, now we are in the midst of a sovereign debt crisis in the Euro zone and a faltering recovery in the United States.

The Indian economy was originally estimated to revert to nine per cent growth in 2011-12, but economic expansion fell to 6.5 per cent, 0.2 percentage points lower than the crisis period. Fiscal deficit again touched over 5.7 per cent of GDP.

(...) [artículo aquí]