'Make-or-break time' for India as economic boom begins to slow down
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Friday 01 June 2012
The Indian economic boom hasn't yet turned to bust – but the euphoria of recent years, as the country expanded at record rates, has given way to concern after figures confirmed growth in the first three months of 2012 had relaxed to its lowest level in nine years.
The economy expanded at a rate of 5.3 per cent between January and March. Although well ahead of richer nations in the West, the figure was the weakest since 2003 and marked a significant slowdown from the 9.2 per cent expansion seen a year earlier.
"This is definitely a very important signal for the government – this is a make-or-break situation for India and the government has to step on the panic button," Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai, told Reuters. "If the government doesn't step in now, India's sovereign ratings may be jeopardised."
The pullback will heap pressure on the Prime Minister Manmohan Singh, whose Congress party leads the coalition government. It has been criticised for stalled reforms and faces growing public opprobrium over a series of high-profile corruption scandals.
The Finance Minister Pranab Mukherjee pinned the blame for the growth figures on a poor performance in the manufacturing sector, which shrank by 0.3 per cent in annual terms. The key agricultural sector, though stronger, also suffered a slowdown.
The economy, meanwhile, continues to labour under the burden of stubbornly high inflation, which poses yet another headache for Dr Singh's administration.
The government's precarious position was underscored yesterday by a nationwide strike against a hike in petrol prices. The protest – organised by the opposition – left thousands stranded at railway stations, bus terminals and airports in numerous towns and cities.
- 1 Unseen Charlie and the Chocolate Factory chapter deemed 'too subversive' released
- 3 Joan Rivers: 'Palestinians deserve to be dead'
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 Mexican woman becomes world’s 'oldest person' at 127
Israel-Gaza crisis: YouTube footage shows scale of destruction after 50 days of shelling
Keira Knightley topless: Conservative actress does own take on #Freethenipple campaign for Interview Magazine
iPhone 6 'hidden code' could indicate sharper screens or bigger phones
Joan Rivers: 'Palestinians deserve to be dead'
Ebola virus: It's ripped through towns – now the deadliest ever outbreak of the virus is heading for Africa's teeming cities
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
- < Previous
- Next >
£85 - £110 per day: Randstad Education Cheshire: randstad education require a ...
Negotiable: Randstad Education Hull: Randstad Education are recruiting for spe...
Negotiable: Randstad Education Plymouth: Randstad Education Ltd are seeking EY...
Negotiable: Randstad Education Plymouth: NEWLY QUALIFIED TEACHER WE CAN HELP ...