New Delhi: The year's
first three quarters with over 8.5 percent growth marked a revival
of the Indian economy in 2010, but the year also ends on a tart
note due to high inflation, a virtual status quo on key reforms
and allegations of some serious financial scams.
The year evidently started on a positive note when the economy
registered 8.6 percent growth in the first quarter, factory output
was up around 17 percent in January and exports grew 35 percent in
February after 13 months of decline.
Stock markets also regained buoyancy, investments by foreign
institutional funds started pouring in again, the appetite for
capital goods picked up. But high food inflation of over 17
percent prevented policy-makers from taking steps to ensure more
liquidity into the system to help the corporate sector.
"India's growth-inflation dynamics are in contrast to the overall
global scenario," Reserve Bank of India Governor (RBI) D. Subbarao
said, releasing the annual monetary policy for the fiscal in
Mumbai April 20.
"The economy is recovering rapidly from growth slowdown, but
inflationary pressures triggered by supply side factors are now
developing into a wider inflationary process," Subbarao added,
reflecting the dilemma before policy-makers.
Little wonder the apex bank hiked its policy rates as many as six
times during the year in a bid to curb inflationary pressures,
while also trying to ensure enough liquidity for corporate lending
to maintain industrial growth.
As the year draws to a close, the economic growth for the third
quarter is an impressive 8.9 percent, exports have expanded by
over 25 percent, foreign funds have invested $28.6 billion in
equity markets, public issue market has revived and foreign
exchange reserves swelled by $11 billion to nearly $300 billion.
"The growth is also broad-based, with recovery in all three
sectors -- agriculture, industry and services -- and in
consumption and investment," Finance Minister Pranab Mukherjee
said earlier this month, expressing confidence of around nine
percent growth this fiscal.
This apart, the government has revived its divestment programme, a
record number of 13.5 million automobiles have been sold between
January and November, and the mobile telecom subscriber base has
expanded from around 525 million to over 700 million in 11 months.
But price rise, albeit moderated, remains a major worry. The
annual food inflation, for example, which stood at 17.28 percent
at the beginning of this year still hovers in the double-digit
level at 12.13 percent.
Even on the policy front, the year began on a promising note when
the government bit the bullet to its decades-old fertiliser
subsidy policy to a more scientific one based on nutrient use,
rather than ad hoc doles that experts said had ruined the
country's soil health.
This apart, the government earlier this month decided to decontrol
petrol prices once again, allowing state-run fuel retailers to fix
their own tariffs for gasoline, but shied away from similar
measures for other fuels.
Result: There was little headway in policy reforms in other areas,
notably on allowing greater private sector and/or foreign equity
in areas like defence production, banking, pension and insurance
businesses and retail trade.
But what really left industry and people at large worried were
allegations of some major scams, especially over allocation of 2G
spectrum to telecom companies during the previous tenure of the
United Progressive Alliance (UPA) government.
"This creates a period of uncertainty. It affects investment and
thus growth," Dilip Modi, the new president of the Associated
Chambers of Commerce and Industry of India (Assocham), told IANS.
"Corruption is a pain in our society. We have to do away with it."
Kumar Keshri can be reached at firstname.lastname@example.org)