A poor monsoon season and lenient monetary and fiscal measures may have brought down India‘s economy and related exchange traded funds (ETFs) down a notch, but that doesn’t mean the economy won’t keep growing.
- The Indian Prime Minister’s Economic Advisory Council expects the GDP to expand 6.5% to 6.75% in 2009-10. This is despite a potential decline in agricultural output, which may diminish 2% because of a short rainy season.
- Inflationary concerns may be met by tighter monetary and fiscal policies in the coming months, according to The Economic Times. Finance Minister Pranab Mukherjee believes reducing the government stimulus, however, may be premature. Wholesale price inflation may reach 6% by March of 2010 from the current rate of about 1%. The projected consolidated fiscal deficit is 10.09% for 2009-10.
- One factor contributing to the new forecast include a strong industrial sector, growing at its fastest pace in 22 months in August.
Chakravarthy Rangarajan, a top aide to the Prime Minister, says the monetary policy should remain “accommodative” and interest rates should be left unchanged to ease the economic recovery, report Kartik Goyal and Cherian Thomas for Bloomberg. Early signs of inflation could force India to act early on interest rate changes.
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- PowerShares India (NYSEArca: PIN): up 75.7% year-to-date
- WisdomTree India Earnings (NYSEArca: EPI): up 90.7% year-to-date
Max Chen contributed to this article.