Economic situation in India

Despite the current crisis or inflation Spira development, India's growth is robust and Irreversible": summarized as Praful Patel, Vice President-South Asia from the World Bank, recently the current economic situation in India together. According to official statistics, the Indian economy in the period 2005-2006 and 2006-2007 respectively, a growth of 9.6% and 9.4% known. This way, India his position as the country with the second fastest growing economy in the world (after China). For 2007-2008 and 2008-2009 expectations remain positive, but the fit analysts issued a resistant growth (including the IMF) recently forecasts downwards.


Thus, for 2007-2008 expects a growth of 7.6% (EIU) to 7.9 (IMF) and for 2008 -- 2009, a growth of 7.1% (EIU) at 8% (IMF). The difference between the two forecasts is quasi entirely attributable to the assessment of a possible recession of the U.S. economy and its impact on revenue in the service (75% of the IT services companies in India have in the U.S. as a customer). In all calculations, the growth for the coming years, however high, but there will be a some slowdown in (the scenario of the so-called "soft landing"). As demonstrated in recent years, the growth rate is greatly influenced by the trading in services, industrial production and relatively good results in the agricultural sector. The income of farmers, the vast majority of the population remains However, extremely low, in comparison with the margins that the distribution and retailing hereby know.

The discrepancy in economic development that exists between the cities and rural areas will therefore continue to increase. The most recent projections show that both exports and imports in 2007 increased by approximately 20%. The deficit trade in 2006 amounted to 1.0%, in 2007 grew to 2.3%. Where annual inflation rates in 2007 amounted to 6.4%, was 7.83% in early May 2008 is the highest level reached since September 2004. The high energy and food prices on the world market (India is a net importer for both), a rapidly growing domestic demand (both private and government) and a deteriorating rupee (see below) suggest that the inflation peak has not yet been reached.

 The finding that the official Inflation at wholesale prices "and not" consumer prices "is calculated, and that the composition of the index basket of food for only 20% (rice: 2.45%, Wheat: 1.38%, pulses: 0.60%) roads, makes the impact of inflation for the Small-sensitive consumers is greater than what the figures show. Sun rose on a year time (source: Observer Research Foundation, April 2008) in Delhi the retail prices of essential spectacular food: rice 21.5%, 8.3% wheat, pulses16.5% to 18.7%, vegetable oils 22.0% to 32.2%, despite the existing mechanisms of government subsidization. With many part-state elections in 2008 (Karnataka, Madhya Pradesh, Rajasthan, Chhatisgarh, Jammu & Kashmir and Delhi) and a national election at the latest May 2009 on the horizon, the temper of inflation, particularly in terms of food and energy prices, a top priority for the incumbent UPA government. The Reserve Bank of India (RBI) has for some time since a restrictive monetary politics, particularly for the relatively high inflation under control.

Thus decided the RBI in April 2008 to end its main interest rate, the Cash Reserve Ratio and the "Repo rate" (the base rate in the Indian banking system) to increase by 0.25% this until 8.25% and 8% (effective from May 24, 2008). Besides inflation, the weakening rupee, especially for a country that a deficit the trade balance has (2.3% in 2007) and that energy and food imports, a problem. Where the currency in the first three months of 2008 lost 11% against the Euro (Rs 63.30 late March 2008), the Indian rupee losing further ground. So May 2008 was already half Rs 65.10 for a Euro paid. After a significant fall / stock market correction the first three months of 2008 (- 24%) appears the restoration of the Sensex, the index of the Bombay Stock Exchange, deployed. So klokte the Sensex on May 19, 2008 on 17,450 pt. which represents an increase of 12.5% compared with the rate on March 31 2008 (15.500 pt.) Since only 3 to 4% of the global average income from shares in India, is the impact on the ordinary people rather low