INDIA’S 5.5 PERCENT

WHY INDIA STRUGGLES TO DELIVER ITS GROWTH POTENTIAL

India is going to deliver its third quarter growth numbers on Friday and expectations are running low as Asia`s third largest economy has had a disappointing year so far, with gross domestic product (GDP) growth languishing around 5.5 percent.

CNBC-MoneyControl, November 29, 2012

The world`s largest democracy, which boasts of a burgeoning domestic market coupled with a youthful population, has seen much better days - just two years ago it was growing at a robust 8-plus percent.

But today it`s faced with the prospect of being the first BRIC (Brazil, Russia, India, China) nation to have its credit ratings cut to junk as investors begin to lose faith in India`s growth story.

(Read more: Does IMF's Dismal India Forecast Signal a Hard Landing?)

Uncertainty surrounding government policies - despite recent reforms to attract foreign investment - a ballooning deficit, sky-high inflation and a currency that has slumped over the last year, have all added to India`s growth woes eroding investor confidence, said experts.

"The key factor that has led to the deceleration in GDP growth from above 8 percent levels to the last quarterly print of 5.5 percent is a near collapse in investments," Rohini Malkani, economist at Citi, wrote in a report.

Growth in capital formation, or the transfer of savings from households and the government to businesses, has fallen from double-digits in the 2005 fiscal year to single-digits in 2011, according to Citi data.

(...) [artículo aquí]