For much of the 21st century, India has been hailed as an up and coming financial power. A vast, young population, increasing attempts to drive down corruption, and a growing educated urban middle class with consumer aspirations have all combined to position India as a future leader of the world economy as more established powers like Europe and North America began to age.
Falling Growth
For many years, the World Bank and IMF along with independent analysts have touted India as the world’s fastest-growing economy, with the strongest outlook over the medium term. However, things haven’t gone according to plan.
In December 2019, the Reserve Bank Of India slashed its growth forecast for GDP from 6.1% to 5%.
There’s also evidence to suggest that the slowdown might be worse than first thought. Over the first eight months of the fiscal year, indicators suggest that imports and non-oil exports have fallen.
Negative Data
There’s also been a decline in the production of investment goods. There’s been a 1 per cent drop in government receipts and a similar fall in the production of consumer goods.
Lending has also fallen, with the country currently in the grip of a full-blown credit crunch that is further impacting on growth. Taken together, it’s a perfect storm of negative indicators that suggest something might be going seriously awry.
The crisis has been a long time in the making.
