Indian economy is in a crisis: Study

[cirr]

By PTI | 16 Jun, 2013

NEW DELHI: The Indian economy is in a crisis with growth slowing down, fiscal and current account deficits running high amid persistent inflation, says a study by an economic think tank.

"The Indian economy is in a crisis. While the growth rate has been declining...the issue (of high CAD) gets amplified against the backdrop of slowing economy, high fiscal deficit and persistent inflation," National Council of Applied Economic Research said.

India's Current Account Deficit (CAD) rose to a record 6.7 per cent in the quarter ended December of 2012-13.

Attributing high CAD to GDP ratio slowdown in exports and increase in imports of oil, coal and gold, NCAER said the high CAD requires high foreign investment.

"This might be a risky proposition given the global financial volatility and keeping in view the interests of foreign investors," it said.

The study said that the persistent increase will lead to macroeconomic risk as it raises concerns about economy's ability to honour its external payments obligations. "It also affects the confidence of potential lenders and investors."

The NCAER study said there is a need to boost exports of merchandise and hence lower the deficit on balance of trade.

As per the study, manufacturing in India is still not internationally competitive in several sectors of production.

"Some long-term factors that need attention involve infrastructure, labour laws and governance reforms...moving to goods and services tax ( GST) would add to India's global competitiveness in manufactured goods," NCAER said.

It further said India should play a pro-active role in strengthening its trade integration with other Asian nations.

"India's trade and investment relations with Asia will play a major role in boosting its exports in the Asian century," the study said.

Also, India should strengthen its bilateral agreements and help bring about foreign trade agreements in groupings such as ASEAN+6 nations, it added.

The six countries outside ASEAN are Australia, China, India, Japan, South Korea and New Zealand.

Indian economy is in a crisis: Study - The Times of India

 

[SR-91]

http://www.nytimes.com/2013/06/17/business/global/faltering-economy-in-china-dims-job-prospects-for-graduates.html?pagewanted=all

Dont worry about India, Worry about yours first.
China is in bigger trouble than India..

 

[Koovie]

Inflation has been low in recent times.

 

[grey boy 2]

What's The Matter With India?
Jun. 2, 2013
Economic Slowdown - Business Insider
Goldman Sachs: InsightsSee Goldman Sachs' perspective on Growth Market

India's GDP climbed 4.8% year-over-year in the January-March quarter.

This was the slowest pace of growth in a decade.

For the fiscal year ending March 31, growth was 5%, down from 6.2% the previous year.

Economic growth has been slowing for nearly three years.

Read more: India's Structural Economic Slowdown - Business Insider

The Current Account Deficit Problem

Current account deficit (when the value of imports exceeds that of exports) fears have been central to India's economic slump.

The current account deficit reached a record high of 6.7% of GDP in the last quarter and has been blamed for weakening the Indian rupee. Remember, India isn't a heavily export dependent nation — exports account for about 25% of GDP in India, compared with about 31% in China.

Read more: India's Structural Economic Slowdown - Business Insider

Slow pace of economic reforms weighing on growth

The slump in investment in the past few years has highlighted the need for economic reform aimed at drawing in foreign investment. The measures rolled out in the FY13-14 budget disappointed markets on this front. One of the biggest disappointments at the time was the failure to deliver on bigger issues like a cut on withholding taxes on debt investments.

In May, the government finally gave markets what they wanted. It announced that foreign institutional investors (FIIs) and qualified foreign investors (QFIs) would be subject to a withholding rate of 5%, down from 20% on income from government and corporate bonds, from June 1 to May 31, 2015.

Read more: India's Structural Economic Slowdown - Business Insider

Major corruption and poor infrastructure

India's mining sector is the perfect example of the kind of corruption that India has to crackdown on if it hopes to draw investment, increase supply, and drive growth.

The Coalgate Scandal as it is popularly known emerged from a report by India's Comptroller and Auditor General (CAG) that accused the ruling UPA government of selling coal fields to top industrialists without using competitive bidding practices, and giving them "undue benefits." The CAG claimed this cost the government billions of dollars in revenue.

But this isn't the only corruption scandal that has delivered a blow to India's economy. In recent years we saw corruption around the Commonwealth Games, the telecom scam, and most recently in cricket, with the Indian Premier League.

India ranked 94 on Transparency International's 2012 Corruption Perceptions Index. This was below three of its BRICs counterparts, Brazil, China, and South Africa. Only Russia ranked lower at 133. Rampant corruption has been a major deterrent to foreign companies looking to invest in India.

Read more: India's Structural Economic Slowdown - Business Insider

The nation's infrastructure problems act as another huge deterrent.

The World Economic Forum’s Global Competitiveness Report for 2012-2013 ranked India 70 out 144 for infrastructure.

"Inadequate supply of infrastructure," "corruption," and "inefficient government bureaucracy," were cited as the top three most problematic factors for doing business.

Read more: India's Structural Economic Slowdown - Business Insider

India: Lower GDP Growth Estimated for the 2012-2013 Fiscal Year March 6, 2013

India Data Talk: The Central Statistical Organisation (CSO) has released the advance estimate of India’s gross domestic product (GDP) statistics for the fiscal year ended March 2013. The economy expanded by 4.96% at factor prices or 3.32% at market prices from a growth of 6.21% and 6.33% at factor and market prices respectively, during the fiscal year ended March 2012. India’s GDP growth rate has declined for two consecutive years from 9.32% during the fiscal year ended March 2011. As of the quarter ended December 2012, India saw real GDP growth of 4.47% year-on-year from 5.25% during the quarter ended September 2012.

Growth estimates by the CSO suggests that declining growth may be largely attributable to poorer growth of private final consumption expenditure which traditionally constitutes the lion’s share of India’s GDP. In real terms, India’s private final consumption expenditure growth halved to 4.14% during the 2012-2013 fiscal year from 7.97% during the previous fiscal year (or 12.85% during the 2012-2013 fiscal year from 16.24% during the previous fiscal year, in nominal terms).

Chart provided by: CEIC

India’s economic growth forecast from the 22nd round of the Professional Forecasters’ Survey (PFS) conducted during the quarter ended December 2012 falls below the 5.5% median growth. . Ran by the Reserve Bank of India (RBI), the 22nd round of PFS saw a downward revision in India’s projected growth rate owing to declining growth projected in the industrial and service sector based on a survey of 31 respondent forecasters. The present survey anticipates a 2.8% median growth in India’s industrial sector during the 2012-2013 fiscal year, a downward revision from the 4.0% median growth anticipated in the quarter ended June 2012. Similarly, the PFS revised their service sector growth forecast to a median of 7.4% during the quarter ended December 2012 from 8.0% during the quarter ended June 2012.

While the PFS projects a moderate recovery during the coming fiscal year (2013-2014) – especially in the industrial sector – poor outlook on external demand (owing to poor global economic outlook) and the sluggish pace of structural reforms and infrastructure improvements has seen growth forecast for the next fiscal year revised downwards to 6.5% from 7.0% projected during the quarter ended June 2012. Furthermore, weaker consumer sentiments and the tightening public finances may further hamper India’s scope for recovery during the coming fiscal year.

 

[faithfulguy]

http://www.nytimes.com/2013/06/17/business/global/faltering-economy-in-china-dims-job-prospects-for-graduates.html?pagewanted=all

Dont worry about India, Worry about yours first.
China is in bigger trouble than India..

Its time for both Indian and Chinese to stop this d**k measurement contest. Both countries are in economic down turn. India's number are worse than China's now because it has traditionally lower growth rate than China. But both nations are not doing well as of now.

 

[navtrek]

By PTI | 16 Jun, 2013

NEW DELHI: The Indian economy is in a crisis with growth slowing down, fiscal and current account deficits running high amid persistent inflation, says a study by an economic think tank.

"The Indian economy is in a crisis. While the growth rate has been declining...the issue (of high CAD) gets amplified against the backdrop of slowing economy, high fiscal deficit and persistent inflation," National Council of Applied Economic Research said.

India's Current Account Deficit (CAD) rose to a record 6.7 per cent in the quarter ended December of 2012-13.

Attributing high CAD to GDP ratio slowdown in exports and increase in imports of oil, coal and gold, NCAER said the high CAD requires high foreign investment.

"This might be a risky proposition given the global financial volatility and keeping in view the interests of foreign investors," it said.

The study said that the persistent increase will lead to macroeconomic risk as it raises concerns about economy's ability to honour its external payments obligations. "It also affects the confidence of potential lenders and investors."

The NCAER study said there is a need to boost exports of merchandise and hence lower the deficit on balance of trade.

As per the study, manufacturing in India is still not internationally competitive in several sectors of production.

"Some long-term factors that need attention involve infrastructure, labour laws and governance reforms...moving to goods and services tax ( GST) would add to India's global competitiveness in manufactured goods," NCAER said.

It further said India should play a pro-active role in strengthening its trade integration with other Asian nations.

"India's trade and investment relations with Asia will play a major role in boosting its exports in the Asian century," the study said.

Also, India should strengthen its bilateral agreements and help bring about foreign trade agreements in groupings such as ASEAN+6 nations, it added.

The six countries outside ASEAN are Australia, China, India, Japan, South Korea and New Zealand.

Indian economy is in a crisis: Study - The Times of India

We know that buddy and things will change for the good only after the next elections.

 

[kawaraj]

it's quite suspicious as rating agencies are upping India's outlook.

the dark side is it could be the fake sign to sell out American hedge fund's India position. In the last 2 quarters they make a head in emerging market. and now time to get fund back the the US and Japan.

 

[+4vsgorillas-Apebane]

India is still too far in the early stages of development to face a slowdown. Just as a simple shovel will increase the speed of farmers who used to dig by hand, it shouldn't take much to achieve really fast growth at this stage.

 

[q12093487q]

http://www.nytimes.com/2013/06/17/business/global/faltering-economy-in-china-dims-job-prospects-for-graduates.html?pagewanted=all

Dont worry about India, Worry about yours first.
China is in bigger trouble than India..

Please explain to me. If china‘s economy which grow faster than india can't even offer enough job for graduates.then what will happen to india‘s graduates？

Why china is in bigger trouble than india？

 

[Truth Finder]

Please explain to me. If china‘s economy which grow faster than india can't even offer enough job for graduates.then what will happen to india‘s graduates？

Why china is in bigger trouble than india？

India's inflation data 4.7%(May,2013), Fiscal Deficit drastically fallen to 4.89%( though the target was 5.2% of GDP), CAD in Q4 of FY 12-13 protected to be less than 5%. India's growth forecast 6%(FY 13-14), 7%(FY14-15),and 8%+(2015 onward). Our economy has bottomed out.

Chinese debt to GDP ratio increased from 75%(2008) to 200%.(source added below)
It will be hard for china to even maintain 7% growth rate 2014/15 onward. By 2020, it will be a fairy tale.
Outsourcing of manufacturing started.
FDI inflows waning drastically.
Cost of labors increasing.
SOME SOURCES:-
Overcapacity fuelled by subsidies threatens the world’s 2nd biggest economy
Chinese industry: Ambitions in excess - FT.com

Fitch says China credit bubble unprecedented in modern world history
Fitch says China credit bubble unprecedented in modern world history - Telegraph

World Bank cuts China's economic growth forecast
World Bank cuts China's economic growth forecast

JUST CHECK "GHOST CITIES OF CHINA"

 

[INDIC]

Please explain to me. If china‘s economy which grow faster than india can't even offer enough job for graduates.then what will happen to india‘s graduates？

Why china is in bigger trouble than india？

Chinese government put money on many useless projects like Ghost Cities to alleviate the GDP growth but such projects ended up with less commercial use. China built world's largest Mall but the mall is abandoned now.

 

[djsjs]

Please explain to me. If china‘s economy which grow faster than india can't even offer enough job for graduates.then what will happen to india‘s graduates？
Why china is in bigger trouble than india？

haha.they don't have so many graduates.
BTW,can any Indians tell us how many graduates do you have every year?

 

[djsjs]

Chinese government put money on many useless projects like Ghost Cities to alleviate the GDP growth but such projects ended up with less commercial use. China built world's largest Mall but the mall is abandoned now.

haha,is that what your media tell you?you overestimate our govt too much.if they can do that then we don't need real estate companies.

 

[doremon]

frankly speaking every nations economy is in crisis including china only nation thats doing better than expected in japan

 

[q12093487q]

Chinese government put money on many useless projects like Ghost Cities to alleviate the GDP growth but such projects ended up with less commercial use. China built world's largest Mall but the mall is abandoned now.

You have no idea about what GDP is,and not a single "ghost city" could exist more than 5 years

By the way, it's company not chinese government put money on real estate.The goverment just sold the land to the company who want to invest it