Hopes of a sustained recovery in the Indian economy has sprung anew with a slew of recent data showed robust growth in most sectors, but prices remain a key concern.
Latest data released showed that car sales grew nearly 40 per cent in April after having recorded healthy sales in the last few months.
Industrial output grew by 10.4 per cent in 2009-10 and consumer durables production has grow by over 30 per cent in the last five months, perhaps indicative of higher purchases of tele- visions and refrigerators and also grow- ing consumer appetite.
"The economy weathered the glob- al credit storm much better than expected, and the recovery is stronger than expectations driven by a pick-up in private sector-led domestic demand," said Rajeev Malik, Head of Economics Research (Asean and India) of Macquarie Securities. Last year around the same time, when Pranab Mukherjee assumed office as the finance minister, uncertainty had gripped the Indian economy.
Growth of the Indian economy slowed to 6.7 per cent in 2008-09 after grow- ing at close to 9 per cent for four straight years before the meltdown. It is set to grow by 7.2 per cent in 2009-10.
The finance ministry responded by announcing a fiscal stimulus package of Rs 1,86,000 crore or 3.5 per cent of GDP to help industry tide over the downturn.
RBI supplemented this by slashing key rates aimed at bringing down the cost of borrowing for embattled cor- porations.
"As a combined impact of various fis- cal stimulus measures and the sup- porting monetary policy the industri- al sector was able to reverse the declin- ing trend in its growth since June 2009," a senior government official said who did not wish to identified.
Things are different this year.
Corporate India has registered healthy growth in profits and revenue for the current fiscal. A quick analysis of 63 companies on BSE 500, which have announced their annual results, reveals that they have posted a profit growth of 26 per cent, their revenue growth stood at 50 per cent.
AGRI & PRICES: KEY CONCERNS Agricultural production is expected to shrink 0.2 percent in 2009-10 as a result of last year's drought, the worst in 40 years. And it has had a major bearing on prices.
India's inflation in April was esti- mated at 9.6 per cent, as food prices continued to remain at elevated levels pummelled by a supply crunch in sta- ple items such as cereals and sugar.
Finance Minister Pranab Mukherjee has had to carefully walk the wedge on resource for fiscal consolidation, sus- tain growth, signal a rollback of stim- ulus package and yet keep prices under check.
gaurav.choudhury@hindustantimes.com
Source: Hindustan Times By Gaurav Choudhury Finance Ministry: Balance-Sheet Act, Pranab Mukherjee's Quick Action Helped India Deal With Downturn
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