Monday, 27 June 2011

Great read on Indian Economy and the challenges ahead

One of the most elaborate literature about the Indian economy I have seen or read in recent times. Exhaustive and well written.

"As a result of this posture India’s economy may, he accepted, expand by only “around 8 percent” in the financial year through March, a reduction on the 8.6 percent he previously estimated, and significantly short of those double digit growth rates India must be aiming for in the near term. In fact most forecasters agree with Subarrao, and see India’s growth dropping back from last years sweltering 10.3% pace, indeed the majority of commentators are agreed that in the very short term this would be no bad thing. India’s inflation is structural, and needs containing so the economy can accelerate to its full growth potential, which I personally estimate to be well into the double digit zone. I have felt and been arguing so for some years (see me berating the Economist on this very topic of India’s growth potential here in 2007 and here in 2006). It is highly likely India can easily fact break all those earlier Chinese records when she really gets going, such is the country’s potential, but that potential can only be realised if the old phantoms which haunt the economy are hunted down and eliminated. High on the “hit list” here has to be the inflation curse."

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