After the economic upheaval, India’s economy and its exchange traded funds (ETFs) have started to settle into a natural rhythm of growth, but that growth may not truly return back to normal until next year.
Right after last year’s financial collapse, India’s growth was around 5.8%, which was the average growth for about 25 years before India saw fast-paced growth, remarks T N Ninan for rediff Business. Now, India is expected to report 6% growth for the year despite suffering a drought on top of a industrial recession.
According to Tony Sagami at Uncommon Wisdom, India is growing the most in these areas:
- Electricity consumption is up 6.2%
- Manufacturing is up 3.4%
- Mining and financial services are up 7.9% and 8.1%, respectively
- Government spending rose to 9.9% of GDP (up from 9.6% in the same period last year)
Once India rebounds from a poor crop year and resumes normal economic growth, the economy might see an average 8.5% growth per year. The Planning Commission is projecting an 8.5% growth for at least the next year and for the year after.
As the impact of fiscal stimulus comes to fruition, 80% of India’s companies are becoming more optimistic about recovery and growth performances in the coming months, according to rediff Business. But a majority of participants feel that high fiscal deficit and massive borrowing could result in higher interest rates.
- WisdomTree India Earnings (NYSEArca: EPI): up 75.8% year-to-date
- PowerShares India (NYSEArca: PIN): up 63.4% year-to-date
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Max Chen contributed to this article.