When I started pro-blogging in March 2006, I wrote many entries about the continuous high economic growth of Indian economy. Now, after 3 years, I guess that bloggers like I will have one less topic to write about the Indian economy. Earlier today, news came that GDP growth for the country in this financial year will be just 7.1%. If you look at the rich and developed countries then you will see that 7.1% is a huge growth for most nations. However, it is not the case for India.
It is not a good growth for India basically for two reasons. We have talked a lot about the prospect of double digit growth for economy of India in the whole of 2006 and 2007. Now, suddenly, even 7% growth seems to be difficult to come and maintain. It is perhaps the direct impact of global economic recession. I hope that many of you know that Indian financial year starts from 1 April and ends on 31 March. So, we will get more accurate stats on April or May.
The current economic year is full of events. We saw the ordinary people suffering from high price of food items and fuel. Inflation reached to a record level. Then suddenly, oil price decreased significantly in the international market, food items became some cheaper too and most of all, inflation became under control. However, a new problem emerged. Export earning started to fall and as a result, job loss in export sector became a big problem. Soon, many Indian workers from the Middle Eastern countries may start to come back to India if the Middle East gets affected badly by the global economic recession.
Hardly anyone feels optimistic now. Instead, they know that the worst is yet to come. Of course, rich countries like USA, Australia, Germany, France and UK have all declared stimulus packages and bailed out some big companies. I am waiting to see what Indian government does in this regard. I have not seen any plan from the Indian government yet to help the large companies or the export sector.
So, does it mean the end of high economic growth for Indian economy? Well, I am afraid it is the right thing to conclude. In fact, some analysts feel that the GDP growth of the current fiscal year may be even lower than 7%. The prospect for any kind of recovery for the next fiscal year looks even more unlikely. Indian economy is now closely related to the US economy. You have to keep this factor in mind too. Hardly anyone is now optimistic about US economy rebounding in 2009 or in 2010.
It is surely bad news for the economy because India is still not even a middle earning country. Millions of people are suffering from poverty, hunger, malnutrition, illiteracy, unemployment etc. India has record number of street children. So, if the growth rate of GDP slows down then it will be impossible for the government and the private sector to create new jobs. It will also be difficult for the government to implement its develop plans or building infrastructure.
I guess that India will have to bid high economic growth a farewell- at least for the time being. Do you agree with my assertion?