Monday, January 10, 2011

Agriculture, Industry and Services India Outlook 2011

Agriculture, Industry and Services India Outlook 2011 ; India emerged relatively unscathed from the financial crisis of 2007-08 to post healthy GDP growth of 7.4% in the 2009-10 fiscal year, even with a poor rainy season during this period. (The Indian financial year is from April 1 to March 31.) First half GDP growth this year has been reported at 8.9 percent over the same period in the previous year. (Statistics released by Central Statistics Office (pdf) (CSO), Ministry of Statistics and Programme Implementation.) The country has attracted large amounts of foreign investment in the form of FDI as well as portfolio investments this year.

Given the continuing economic problems in Europe and the United States, India along with many other emerging markets has seen an increased influx of foreign capital. Capital requirements for Indian industry remain high given the rapid expansion of the economy, which means FDI investments are easily absorbed. Portfolio investment in India this year has broken all previous records resulting in a steep rise in the equity markets. This has increased the chances of bubble formation. Between April 1, 2009, and November 8, 2010, the BSE Sensex zoomed from 9,901 points to an all-time closing high of 21,004 points. That index has been hovering around the 20,000 mark ever since.

Since India is geographically large, and socially and politically complex, any economic analysis cannot ignore the role these factors play in the makeup and management of the Indian economy. India has a huge number of poor people with over 400 million living in poverty. To put this in perspective in absolute terms, India has one-third of the world’s poor. Hence, government economic policy many times is skewed heavily toward poverty alleviation and subsidization of essential goods. Read More...
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