Friday, August 14, 2009


The worse in the Indian economy seems to be over. The recessionary tendencies and negative sentiments have been arrested and a positive stimulating economic sentiment is growing. The growth in the industrial and service sectors is likely to improve substantially during 2009-10. The growth in
the agricultural sector still depends on next few weeks down-pore. The capital market sentiments have substantially revived and the response to public issue and private placements through QIB route has also recovered fairly. It is expected to gain momentum in next 3 to 6 months and by the end of 2009 or in the 1st quarter of 2010, the capital market shall be expected to get geared up in double digit growth. The new projects and investments in select sectors including power sector, infrastructure and roads are taking shape very fast. A large number of mega investment projects
are also gaining ground towards implementation. The saving rates in Indian economy continue to be around 35%. As the investment sentiment further improves; the money supply (M3) growth will stimulate financial activity and credit off-take. Interest rates have not come down as expected in spite of negative inflation as per WPI. The consumer price index is yet to recede. The confidence on the banking and financial system had been impacted due to slow-down during last one year and 72% of the banks liability is in one year deposit, restraining banks to take longer commitments on the credit
off-take side. The banks are saddled with huge funds, currently being invested by them in securities. The commercial lending growth has just commenced and is likely to gain substantial momentum in next 2 or 3 quarters. The apprehension of large government borrowings from commercial banks may suck money from the system. At the same time budgetary expenditure of one million crores by the Union Government during the current financial year will definitely stimulate money supply and economic activities. The professionals and entrepreneurs need to gear up and take necessary action for planning growth and diversification of their business to take full advantages at the time of economic revival. The international sentiment in the US economy and the European economy has also comparatively improved. The US and European economy are expected to have positive growth in the year 2009-10. This will have positive impact on the sluggish export market.

The major concern still remains on the agricultural side due to lack of irrigation and poor monsoon. The government needs to initiate a massive agricultural infrastructure. Dr. Manmohan Singh can now initiate linking of various rivers and the Indira Gandhi Canal Project mega phase should be given momentum on a national basis. Like Rs. 2 lakh crores have been committed towards growth in next
2 years in the road sector, a similar budgetary plan for river linkage and canal networking across the country would pave the way for next green revolution and will provide sustained growth in Indian economy. Empowering agriculturists by incentivising storage capacity and providing financial power through better value addition to agricultural products can provide the biggest stimulus to poverty eradication and growth of Indian economy.


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