Is the Indian economy growing at a much lower pace than what is officially stated?
There seems to be bad news ahead for the Indian economy in 2016 and beyond.
8The expectation that the Indian economy will soar after the new government is ushered has been belied.
The following factors seem to be worrisome for the economy:
8Private-sector fixed-capital investment, as a share of gross domestic product, peaked at 33.6% in 2011-12 and has since trended down to the current low of 28.7%.
8Maharashtra and Karnataka, for example, both experienced a cumulative decline of about 15% in projects; the declines in Gujarat and Tamil Nadu were sharper, at more than 20%.
8As for ‘Make in India’, the reality is that capacity creation in manufacturing has suffered a cumulative decline of 35% from its peak in 2011 till now. The cumulative decline in services is 13%.
817% of Indian bank loans are stressed, a significant share of which may not be repaid.
8External conditions will also hold down investment in 2016. The US economy has recovered, but the Chinese motor has slowed markedly, and growth in Japan and much of Europe remains sluggish. That inevitably means fewer incentives in India to invest in export-oriented sectors.
8But, whatever the state of the global economy, the bottom line is that India cannot attain its potential without a strong revival in investment. If the economy is to achieve the double-digit growth rates that China once boasted, India will need to build much more production capacity and infrastructure.
8The solution cannot be to focus primarily on public sector investment or to woo foreign investors, which is the policymakers' current approach.
8When India's economy was growing at 8 to 9 per cent during the boom years of the last decade, its exports were surging at an annual pace of 25 per cent. No economy has sustained an expansion of 8 per cent without a major contribution from export growth. With India's exports estimated to have fallen by 5 per cent in 2015, the economy is currently expanding at a 5 to 6 per cent pace (as opposed to the 7 to 8 per cent growth claimed by official data)
For more details visit indianpetroplus.com
There seems to be bad news ahead for the Indian economy in 2016 and beyond.
8The expectation that the Indian economy will soar after the new government is ushered has been belied.
The following factors seem to be worrisome for the economy:
8Private-sector fixed-capital investment, as a share of gross domestic product, peaked at 33.6% in 2011-12 and has since trended down to the current low of 28.7%.
8Maharashtra and Karnataka, for example, both experienced a cumulative decline of about 15% in projects; the declines in Gujarat and Tamil Nadu were sharper, at more than 20%.
8As for ‘Make in India’, the reality is that capacity creation in manufacturing has suffered a cumulative decline of 35% from its peak in 2011 till now. The cumulative decline in services is 13%.
817% of Indian bank loans are stressed, a significant share of which may not be repaid.
8External conditions will also hold down investment in 2016. The US economy has recovered, but the Chinese motor has slowed markedly, and growth in Japan and much of Europe remains sluggish. That inevitably means fewer incentives in India to invest in export-oriented sectors.
8But, whatever the state of the global economy, the bottom line is that India cannot attain its potential without a strong revival in investment. If the economy is to achieve the double-digit growth rates that China once boasted, India will need to build much more production capacity and infrastructure.
8The solution cannot be to focus primarily on public sector investment or to woo foreign investors, which is the policymakers' current approach.
8When India's economy was growing at 8 to 9 per cent during the boom years of the last decade, its exports were surging at an annual pace of 25 per cent. No economy has sustained an expansion of 8 per cent without a major contribution from export growth. With India's exports estimated to have fallen by 5 per cent in 2015, the economy is currently expanding at a 5 to 6 per cent pace (as opposed to the 7 to 8 per cent growth claimed by official data)
For more details visit indianpetroplus.com
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