Friday, April 4, 2008

The Indian Economic Scenario

India continued its run as a fast growing economy, even as the inflation touched the 3 years high level at 7% for the week ended March 22, because of the rise in prices of essential commodities like food, vegetables, manufactured goods and minerals.

The Asian Development Bank predicted that the growth rate may slide from the one projected for the year 2007 - 08 (8.7%). But it is optimistic that the growth could bounce back to a higher level at 8.5% due to higher consumer spending and an accommodative government monetary policy.

It is expected that the overall GDP growth rate for the financial year 2009 is estimated to be about 8.5%. The ADB is of the view that despite faltering growth, the Indian economy has built up considerable momentum during the recent past and this dynamism should catalyze the growth again.

The silver lining is that despite the inflationary pressures which is due to global rise in food and commodity prices, the ADB projected a positive outlook for the entire Asia.

Post script :

Stock market in India reacted negatively to the surge in inflation. The Sensex shed 489 points or 3.1 per cent and the Nifty down by 2.6 per cent or 124 points. Thus the week ended in red for the Indian stock market. We will wait and see how it progresses for the next week?

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