Indian Economy: The growth story
India came out successfully from the global recession without much damage and is changing in terms of economy. The three stimulus packages served well in order to meet this goal. It is expected that for FY 2009-10, the growth rate will be far better.
A LOT has happened during the financial year 2009-10. Generally, the year 2009 was the strongest in ten years for the Indian stock market. In 2009 alone, Indian equity market rallied over 81 percent. Due to financial meltdown globally, a big correction was seen during second half of FY 2008-09. India came out successfully from the global recession without much damage. The three stimulus packages served well in order to meet this goal. In the FY 2008-09 the Indian economy recorded a growth rate of 6.7 percent. It is expected that for financial year 2009-10, the growth rate will be far better. Above 7 percent growth rate itself is a decent one. Regime change in India happened during financial year 2009-10, which made less effect because the same alliance came into power, only some name plates changed. During the final years of NDA regime, way back in 2002-04, drastic change happened in the Indian economy. When UPA came in to power in 2004, Indian economy was literally at the starting point of a marathon. Gradually it gained phase and in January 2008 the Indian equity market touched its all time heights. But profit booking coupled with recessionary fears erased almost all these gained points. After the recession came the Satyam scam, which also wiped out some points, from the Indian bourses.
During the beginning of this financial year (FY2009-10) inflationary pressure was pretty low since the figure was inching towards zero level. Without much delay Indian economy witnessed deflation. But these are now history since the February 2010 inflation figure is at 9.89 percent, which is pretty high. Recently RBI hiked banking rates to curb inflation. Despite some hiccups in the beginning, FY 2009-10 marked another booming stage in Indian economy. India is now well on the track again.
Regime change
In primary analysis, the budget gave a clear vision regarding the economy of the country. It proposed a gradual decrease in fiscal deficit. It estimated the fiscal deficit of the government would become 4.1% by FY2013. More funds have been allotted to infrastructure products. After the budget, petroleum products became costlier for retailers. The budget which aimed at consolidated growth evoked cheers among India incorporated.
Budget raised the PSU divestment target by Rs.15, 000 crore to Rs.40, 000 crore. Government also want to collect Rs.36, 000 crore from 3G telecom license. These alternate methods to find revenue are welcome moves from the part of finance minister. Indian share market expected less from the budget and its reaction was somewhat neutral. The second coming of UPA government in India definitely raised confidence level of investors in India and abroad which will add fuel to the growth story of India as a whole.
Banking sector reforms
Another significant point in the last budget was related to banking sector reforms which was a major development during the last financial year. Government’s vision is clear-reach out to the large rural population. Almost 70 percent of Indian population resides in villages. The banking density in India is pretty low comparing to its massive population. Hence government is going to grant banking licenses to private players and non-banking financial companies (NBFCs). Global major Goldman Sachs has already applied for the license. Indian banking sector will witness a drastic change when this happens. It will become more competitive and the rural population would be benefited. Getting loans will be much easier and economic independence will be the result. More and more Indian banks are now opening their shops abroad, the numbers will increase. Service sector contributes 62.6 percent of Indian GDP, and financial services are one of the major contributors. FY 2009-10 paved way for banking sector reforms in Indian economy.
Kirit Parekh committee report
Another important event happened during financial year 2009-10 was the submission of Kirit Parekh committee report. The committee deals with oil pricing reforms and was constituted during the last interim budget. The report proposes complete deregulation of petroleum prices in the county. If the report is implemented as such, petroleum prices will increase. Recently Prime Minister Dr. Manmohan Singh stated that regarding oil pricing some strict measures should be taken. This statement in very much relevant now a days since government spends lot of money in terms of compensation to oil companies. Kirit Parekh committee report would lead to the supremacy of public sector oil companies. The price burden will directly go to the consumers. The committee report and how it will be implemented has got significant impact on Indian economy.
Tax reforms
In simple terms, government can find out revenue by two means. By spending less or by taxing more. But both these methods have got so many limitations. Spending less means slow in growth rate taxing more also means the same. So something long lasting is the need of the hour. The implementation of new direct tax code (DTC) and Goods & services tax (GST) are the two major developments. These changes were proposed earlier but now delayed by one year. It is believed that now it would be in place by April 1, 2011. These common tax proposals would prove beneficial for Indian economy. Apart from this individual tax slabs are increased, which means more purchasing power to the public. Now this happens on a yearly basis and is positive for Indian economy.
Altogether India is changing in terms of economy. Everyone now realities that. In the financial year 2009-10 sensex recorded a gain of 82.4 percent. Now our only concern is inflation. The stimulus packages contributed much towards the raising inflation figures. India recorded an inflation rate of 9.89 percent in February 2010. In March we may have double digit inflation. Inflation shows the health of an economy but when it is out of control it is dangerous, since it eats purchasing power of the people. In the near term credit rates will increase. But if we grow at decent levels (that will happen for sure) we need only to fear less. During the financial year, Tata motors recorded an increase of 311 percent in it's share price. The share prices of the infrastructure major L&T also increased by 147 percent. Not only the banking sector but the Indian education system is also going to undergo changes. Aviation and insurance sectors are waiting for policy approvals. The entertainment sector is growing. India continues to be the number one hub of movies around the world. People are getting more exposed to technology. Financial year 2009-10 indeed prepared the script of the growth story of Indian economy.
Budget raised the PSU divestment target by Rs.15, 000 crore to Rs.40, 000 crore. Government also want to collect Rs.36, 000 crore from 3G telecom license. These alternate methods to find revenue are welcome moves from the part of finance minister. Indian share market expected less from the budget and its reaction was somewhat neutral. The second coming of UPA government in India definitely raised confidence level of investors in India and abroad which will add fuel to the growth story of India as a whole.
Banking sector reforms
Another significant point in the last budget was related to banking sector reforms which was a major development during the last financial year. Government’s vision is clear-reach out to the large rural population. Almost 70 percent of Indian population resides in villages. The banking density in India is pretty low comparing to its massive population. Hence government is going to grant banking licenses to private players and non-banking financial companies (NBFCs). Global major Goldman Sachs has already applied for the license. Indian banking sector will witness a drastic change when this happens. It will become more competitive and the rural population would be benefited. Getting loans will be much easier and economic independence will be the result. More and more Indian banks are now opening their shops abroad, the numbers will increase. Service sector contributes 62.6 percent of Indian GDP, and financial services are one of the major contributors. FY 2009-10 paved way for banking sector reforms in Indian economy.
Kirit Parekh committee report
Another important event happened during financial year 2009-10 was the submission of Kirit Parekh committee report. The committee deals with oil pricing reforms and was constituted during the last interim budget. The report proposes complete deregulation of petroleum prices in the county. If the report is implemented as such, petroleum prices will increase. Recently Prime Minister Dr. Manmohan Singh stated that regarding oil pricing some strict measures should be taken. This statement in very much relevant now a days since government spends lot of money in terms of compensation to oil companies. Kirit Parekh committee report would lead to the supremacy of public sector oil companies. The price burden will directly go to the consumers. The committee report and how it will be implemented has got significant impact on Indian economy.
Tax reforms
In simple terms, government can find out revenue by two means. By spending less or by taxing more. But both these methods have got so many limitations. Spending less means slow in growth rate taxing more also means the same. So something long lasting is the need of the hour. The implementation of new direct tax code (DTC) and Goods & services tax (GST) are the two major developments. These changes were proposed earlier but now delayed by one year. It is believed that now it would be in place by April 1, 2011. These common tax proposals would prove beneficial for Indian economy. Apart from this individual tax slabs are increased, which means more purchasing power to the public. Now this happens on a yearly basis and is positive for Indian economy.
Altogether India is changing in terms of economy. Everyone now realities that. In the financial year 2009-10 sensex recorded a gain of 82.4 percent. Now our only concern is inflation. The stimulus packages contributed much towards the raising inflation figures. India recorded an inflation rate of 9.89 percent in February 2010. In March we may have double digit inflation. Inflation shows the health of an economy but when it is out of control it is dangerous, since it eats purchasing power of the people. In the near term credit rates will increase. But if we grow at decent levels (that will happen for sure) we need only to fear less. During the financial year, Tata motors recorded an increase of 311 percent in it's share price. The share prices of the infrastructure major L&T also increased by 147 percent. Not only the banking sector but the Indian education system is also going to undergo changes. Aviation and insurance sectors are waiting for policy approvals. The entertainment sector is growing. India continues to be the number one hub of movies around the world. People are getting more exposed to technology. Financial year 2009-10 indeed prepared the script of the growth story of Indian economy.
Login
 Login through Social ID
|
Not finding what you are looking for? Search here.
