Is India's GDP a Gasping Elephant or a Tortoise?

Finally the Investment Tracking system was introduced to monitor all the projects that cost over 1, 000 crore. So the public sector projects would be tracked by the National Manufacturing Competitiveness Council and the private sectors would be monitored by the Department of Financial Services. These departments would be expected to submit quarterly reports on the progress of the projects and enlighten about any issues that needs to be resolved in order to complete the project.

The figures are considered as the wake-up call for the left-leaning coalition government which was elected in 2009, the government is just filled with corruption and scandals say most of the commentators. It seems like we are heading back to the crisis of 1991 and this was described in the front page news by The Economic Times with the headline stating, “Goodbye 2020, Hello 1991!” The other indicators that are the source for worry are the rupee at historic low, annual inflation remaining high at 7 percent, the public deficit is large.

The high public deficit means that the government spending has to reduce and the high inflation makes it difficult for the Central Bank to cut the interest rates. Analysts say that ideological differences and the distractions over corruption scandals have made the government unable to push through reforms to open up the economy and throw out the red tape. A long standing recommendation by the business leaders to open the retail sector to foreign investment last year ended with a revolt in the coalition. After the publication of the GDP the government announced to ban officials meeting in five star hotels to save money.

In a note to its client Morgan Stanley an investment bank said that it had reduced its estimate for growth to 5.8 percent from 6.3 percent this fiscal year. A research consultancy named Capital Economics also slashed its forecast to 6 percent from 7 percent. The other corporate lobby groups the Confederation of Indian Industry and Federation of Indian Chambers of Commerce and Industry have renewed their calls for economic reforms. Adi Godrej the President of CII said, “We have to get back on the track of reforms.”