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November 14, 2010    

India optimistic for double-digit growth

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by Kay Murchie

India’s Finance Minister, Pranab Mukherjee, has expressed his optimism for the economy’s return to growth.

According to the FM, the economy should experience growth of 9% but should make it past the double digit barrier in the next two years.

He added that the economy was “on a path to rapid recovery” after the latest quarter saw growth of 8.8%.

However, the economy faces headwinds - the country’s inflation rate is the highest among the Group of 20 leading nations, due to soaring food costs.

Earlier this month, the Reserve Bank of India (RBI) raised rates for the sixth time since the start of the year, in a bid to tame stubbornly high inflation in a thriving economy.

Annual food inflation has surged, causing major problems for the 450 million people who live below the poverty line.

Furthermore, figures published last week revealed a slowdown in industrial output in India.

India’s statistics office said output grew 4.4% on an annualised basis in September – less than expected and down from August’s 6.9% growth.

Mr Mukherjee described the industrial slowdown as a “matter of concern” and the figure fell far short of the 7% expected by analysts.

Industrial production was dragged lower by manufacturing, which grew 4.5% in September after rising 7.5% in August.

Meanwhile, mining output was up 5.3%, while electricity production grew 1.7%.

India’s factory output is way behind China’s, which showed a 13.1% year-on-year growth in October, according to figures published last week.

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