India’s growth story – 6.9% this fiscal, next equally bad   Leave a comment

No money to spend and generate demand,external atmosphere likely to stay harsh

The admission is here, finally! The Central Statistical Organisation, the government’s number cruncher, on Tuesday said India’s GDP will grow by just 6.9%, the slowest pace since the global financial crisis hit local shores in early 2009.What’s worse is analysts saying the next fiscal will be no different. This means prospects for jobs and higher salary will remain stifled over the next 12-14 months.

“For the next fiscal, we see  limited drivers to growth —private consumption is likely to stay steady, while investment demand could take a bit of time to pick up,” said Indranil Pan, chief economist, Kotak Mahindra Bank.The fiscal space also does not afford a chance to pump prime the economy, he said — meaning the government does not have the money to spend and generate demand — while the external atmosphere is likely to stay harsh.

Chetan Ahya and Ridham Desai of Morgan Stanley, as part of an Asia Strategy Report,on Tuesday said they expect the depth of the growth slowdown to be at least as bad as in 2008-09, if not more. “We see the long duration of the current slowdown as a bigger challenge. This time around, there is limited leeway for aggressive action,no room for counter-cyclical fiscal expansion, while weak global markets imply that a V-shaped recovery is unlikely,” they said in the report.


  1. The fiscal space also does not afford a chance to pump-prime the economy, Indranil Pan, chief economist, Kotak Mahindra Bank said — meaning the government does not have the money to spend and generate demand
  2. This means salaries will be moderate and in a few sectors, employees will be ready to hop jobs with a cut in pay, said Kris Lakshmikanth, CEO and managing director, HeadHunters India, an executive search firm
  3. To return to the 7.5%-8% growth track, addressing the power sector issues and some amount of monetary policy easing by the RBI is required

Posted February 8, 2012 by avinash2060 in Economy

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