Business Daily from THE HINDU group of publications
Wednesday, Mar 25, 2009
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Business Daily from THE HINDU group of publications Wednesday, Mar 25, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Industry & Economy
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Economy Web Extras - Outlook ‘GDP growth rate to be 4.8-5.5% in 2009-10’
K.R. Srivats New Delhi, March 24 The country’s GDP growth rate for 2009-10 might be in the range of 4.8 to 5.5 per cent, the Indian Council for Research on International Economic Relations (ICRIER) has said, reflecting the likely intensification of domestic economic slowdown. In a working paper, Indian Economic Outlook 2008-09 and 2009-10, the economic policy think-tank has attributed the lower forecast for the next fiscal, when a new Government assumes office, to the impact of the worst economic downturn since the Great Depression. For the current fiscal, the GDP growth has been pegged by ICRIER at 6.3 per cent, lower than the projected 7.9 per cent in a “no-shock” situation. This GDP forecast comes close on the heels of the International Monetary Fund’s projection that India’s GDP growth will slow down to 6.25 per cent in 2008-09 and 5.25 per cent in 2009-10, in the wake of “deteriorating global outlook”. Global blowICRIER has noted that the global crisis has dealt a severe blow to investment sentiments and consumer confidence in the economy. The crisis would also deepen and prolong Indian economy’s slowdown, according to the think-tank. The basic question is how long it will take to revive the investment and consumer demands, which are falling precipitously, says the ICRIER paper. It noted that fiscal and monetary expansionary steps at a time of extreme uncertainty worldwide will have limited impact.
A better way of responding to the crisis is the often repeated and now a cliché of kick-starting the “second round of reforms,” which was long overdue. India has to substantially relax its “permit and approval” system by carrying out procedural reforms that will improve the investment climate for domestic and foreign investments. Also, India ranks low among countries on regulatory environment with regard to enforcement of contracts, payment of taxes, business closure, licensing, property registration and setting up of business (World Bank, 2008). Reforms in these areas would be much more effective than just packages of monetary and fiscal stimuli to restore investor and consumer confidence, the ICRIER paper said. While monetary and fiscal stimuli may provide the short-term palliatives for shoring up GDP growth, the real push will only come from implementing structural reforms, the agenda for which has been put on the shelf for a while. “We cannot hope to generate the needed economic activity or the employment levels by continuing to tinker around with the economy. Bold and visionary measures, such as those undertaken in the early nineties, are needed again if the economy is not to slip into a prolonged phase of anaemic growth,” says the paper. ‘ GDP growth to slow down to 5.5%’ Optimism on GDP growth rate CMIE retains GDP growth forecast at 9.5% Crisil scales down GDP growth forecast to 8.1% India’s GDP growth to slow down to 8%: ADB General elections spending could provide stimulus to economy Indian economy to outperform China by 2010: Montek Govt aims to move economy forward thru inclusive growth More Stories on : Economy | Outlook
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