This Is How India Is Keeping Its Place as Asia’s Fastest-Growing Large Economy – India Real Time – WSJ

What a contrast! See pair of articles – this on on India, the other on China, both from WSJ.

India is on track to keep its spot as Asia’s fastest-growing large economy, the Asian Development Bank said Tuesday.

The Manila-based development lender expects the Indian economy to grow by 7.4% in the year that ends next March, keeping its earlier forecast unchanged in an update to its regional outlook.

The ADB lifted its forecast for China’s growth this calendar year slightly, to 6.6%, but it still expects India’s economic growth to broadly outpace its neighbors’ through 2017. (The comparison isn’t exact. India and other South Asian countries report economic data on a fiscal-year basis. China and others use calendar years.) In Asia, only Myanmar, which is opening up after decades of isolation but remains small by comparison, is expected to expand more quickly, at 8.4%.

The ADB said India’s growth prospects have been buoyed thanks to the enactment of “long-awaited structural reform.”

The bank lauded “strong progress” in restructuring Indian lenders’ balance sheets, which for years have been weighed down by bad loans. Large corporations are also finding ways to reduce debt, the bank said, which could also help resuscitate long-stagnant lending and investment.

Recent legislation that creates a national goods-and-services tax, the ADB said, is “a key step toward a much more integrated, productive economy.”

Other factors, the bank said, should keep Indian consumers spending.Government workers are due to receive a big boost to their pay and pensions, while abundant monsoon rains this summer will likely lift rural incomes.

There are risks, though, the ADB said.

Much of India’s recent growth has been driven by government spending. But that has slowed after a burst of public investment last year. New Delhi this financial year wants to shrink its budget deficit, but so far, it hasn’t raised as much money as expected from selling off stakes in state companies and other assets. That means expenditure may need to be reined in even further.Investment by private companies, meanwhile, has been “listless,” the ADB said.

Foreign direct investment in India has remained strong, the bank noted, and New Delhi has been raising limits on foreigners’ stakes in Indian enterprises. But the $63 billion flood of foreign investment seen last year “would be difficult to replicate,” the bank said.

Rapid price growth, too, could continue to weigh on Indian consumers and investors. Inflation in India, which the ADB forecasts at 5.4% this year, remains among the highest in Asia.The nation’s central bank is now actively mandated, for the first time in its history, to keep consumer inflation within a government-set range. “While this is a ground-breaking monetary policy reform, the target of 4% would seem somewhat ambitious,” the bank said.

Source: This Is How India Is Keeping Its Place as Asia’s Fastest-Growing Large Economy – India Real Time – WSJ

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One Comment to “This Is How India Is Keeping Its Place as Asia’s Fastest-Growing Large Economy – India Real Time – WSJ”

  1. I have read the above news about India Economy and the other article title:Warning sounded over Chinese Economy.

    Let me say from the outset that I do not even pretend to give the impression that I understand all the economic issues involved in the nations economy except that GDP gives a good indicator. Even GDP data can be presented in a positive way even the real financial picture is not that rosy! Remember, when India’s GDP changed (a while ago!) when India Government changed the method of calculating the data,,,Just like that!!

    So in brief I would say that it is how the data is presented ,,,,therefore its an art not a science.

    It also reminds me that when Mrs Thatcher was the Prime Minister… she started a new method of calculating the inflation i.e.by a number of items in the shopping basket that an average person would buy each month to survive. In the beginning it worked well, but when the purchasing value of the shopping basket went slightly higher, she removed one or two items from the basket so that inflation show stable or going down, as her Government intended.

    I do not think I need to add anything more when the emphasis is on the presentation of data but the real picture of any country.

    Like

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