Wednesday, December 8, 2010
India's Economy Expands
During this time of global financial crisis, India's economy recently expanded by 8.9% due to the impacting output from farming and manufacturing. The farming sector grew by 4.4% while the manufacturing sector rose by 9.8% due to the heavy emphasis for domestic demand in manufacturing within India. Private spending and investments also increased during the last fiscal quarter which all contributed to an increase in GDP. This growth in overall GDP comes at a peculiar time due to increasing interest rates set by the Central bank of India. Governor Subbarao believes that there will be a decrease in policy rates as a way to ease inflation within the country as the world economy is still very fragile and unstable. In fact unless the growth in the nation increases again, the central bank is very unlikely to increase policy rates during this fiscal year to ease the growing inflation.
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3 comments:
Do you think that India's political system will hold it back at any point? India is well known or its bureaucracy, and it often has a hard time passing necessary economic reforms due to political pressures or simple inefficiency. Should it choose to be autocratic in terms of economic policy?
I think that something that is interesting is that we still refer to it as a global financial crisis, but it seems that some countries (while they may still have problems) have rebounded from the crisis, such as growth in the Indian economy...
During the months of October and November many Indians increase spending and investments due to the festivals of Diwali etc. Many families invest in gold and silver as well which is why these numbers are higher than the previous quarter. It is similar to what the US faces during the time of Christmas.
It is however peculiar that while the US is facing deflation, India's politicians are trying to ease inflation.
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