Indian economy poised for high growth
In its annual budget, India’s finance minister, Pranab Mukherjee, has said the economy is in good shape and stimulus measures are set to be reviewed.
The economy is recovering faster than expected after expanding at an annual rate of 7.9% in the three months to the end of September, after growing 6.7% in the year to the end of March 2009.
The Indian Government recently said the economy is expected to expand 7.2% in the year to the end of March.
This led many analysts to believe that the Government might consider withdrawing stimulus measures as a result of the strong performance.
The country’s central bank has injected in excess of £80 billion in to the economy since September 2008 in order to boost the economy.
However, Mr Mukherjee said the threat of inflation remains and must now be controlled, while debt levels need to be trimmed.
In December last year, prices rose by more than 15% compared with a year earlier – the highest rate of inflation for more than a decade.
Meanwhile, the budget deficit has grown to its highest level in more than 15 years – the equivalent of 6.9% of GDP – the Government plans to reduce this to 5.5% next year.
Finally, the Government expects the economy to expand by 8.7% in the current fiscal year.
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