As though you couldn’t tell from the performance of its exchange traded funds (ETFs), India is already one of the world’s fastest growing emerging economies. That makes a report that the country’s economic potential is at six-year highs is just the icing on the cake.
India’s Prime Minister Manmohan Singh’s top economic adviser said his country’s economic potential has not been this high since 2004. Kartik Goyal for BusinessWeek reports that as a result of this potential, major global corporations like Wal-Mart (NYSE: WMT) and Harley-Davidson (NYSE: HOG) are setting up shop there.
Amid the global economic turbulence, India was able to sustain growth that, while slower, was still enough to be the envy of developed nations. How did India manage 6.7% growth as other countries saw negative growth? India is a domestic demand-driven economy, unlike China, which is an export-oriented economy, says The Economic Times. [Other Reasons to Watch India.]
Mukesh Jakota and Abhrahit Gangopadhyay for The Wall Street Journal report that one of the major obstacles that India faces is continued investment in their infrastructure – both physical and social. The country is plagued with blackouts, poor road conditions and inefficient ports. The government has said it needs $514 billion in investments. Poor infrastructure has a major impact: it’s knocking an estimated two percentage points off the country’s growth.
Also of concern is that India’s food-price inflation accelerated for a fourth straight week, says Kartik Goyal for BusinessWeek. [How India’s Consumers Aid Growth.]
An index measuring wholesale prices of lentils, rice, vegetables and other food articles compiled by the commerce ministry increased 17.94% in the week to Jan. 30 from a year earlier after a 17.56% gain the previous week. This will be key in sustaining economic growth as well, thanks to increased pressure on food inflation.
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