Falling economic growth and future challenges

Is the Hindu rate of growth back? This is a serious question and needs to be addressed in all its sincerity. If we recall, the India was the most ideal destination for foreign money only a couple of years ago. All of a sudden things have gone sour and infact the future looks dismal unless a miracle takes place

The World Bank has done its calculations and have released data on the Indian growth rate. The data is as follows

Annual Growth Rate

2008                                                       3.9%

2009                                                       8.5%

2010                                                       10.5%

2011                                                       6.3%

2012                                                       3.2%

Their calculation of GDP growth rates is after adjusting for inflation and exchange rate variations. Is the economic growth of India impeded by exogenous factors such as the global economic environment. Apparently not. The data suggests that the sub-prime crisis of the US did not shake the Indian economic growth. Then it must be clearly due to endogenous factors. Let us list some of these factors

  1. The country is deeply embroiled in corruption charges you name it whether it is the Lallu Prasad Fodder seems G2 scam the coal scam etc. All these have stifling effect. The county’s energy is focused on these and this has resulted in a policy paralysis
  2. We need plenty of domestic savings and continuous foreign inflow to keep the growth coming. Both are hit hard in the last few years. Due to high levels of local as well as imported inflation the domestic savings rate as a percentage of GDP has fallen significantly
  3. Also a large portion of the savings have gone into the purchase of gold and land. The monies available for economic activities have shrunk tremendously
  4. Failure to create a belief among foreign investors that we are not contentious nation but one committed to growth


Let us hope that these challenges are addressed forth night so that the future growth is achieved on a solid foundation.

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1 Response to Falling economic growth and future challenges

  1. din_tsl@yahoo.co.in says:

    Your growth rate %ages mentioned are WRONG.
    Sent on my BlackBerry® from Vodafone

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