Tuesday, February 28, 2006

Economic survey 2005-06 India

Highlights from Business Standard :

While these are rosy....
Growth projection 8.1% GDP
Savings rate up at 29.1% of GDP
Investment rate up at 31% of GDP
Industrial growth at 7.8% (April-December)
Tele-density increases to 11.32%

These need money
Rs 1,72,000 cr investment required for national highways
Rs 40,000 crore required for airports
Rs 50,000 cr investment needed for ports

From Businessline...

"The growth trends for the last three years appears to indicate the beginning of a new phase of cyclical upswing in the economy from 2003-04... In contrast to the sharp fluctuations in agriculture, industry and services have continued to expand steadily and have acted as the twin engines propelling the overall growth of the economy.''

Possible risks: Crude prices, interest rates and fiscal risk

"With increasing dependence on imported crude and growing openness, India is no longer insulated from the rest of the world. This inflation uncertainty, together with the unresolved global macroeconomic imbalances, casts it shadow on the interest rate scenario. A continued firming up of global interest rates beyond a point poses the risk of dampening the domestic investment boom"

...As for the fiscal risk, both at the Central and State levels, the survey says it arises from the argument that the fiscal adjustment process has led to expenditure compression of the wrong kind. "It is important to safeguard against this argument as the solution lies in not increasing the deficits, but in meeting squarely the challenge of improving the quality of expenditure,'' it said, hinting at pressures to enlarge expenditure without corrective measures of stopping leakages in the expenditure stream....

For more, read the entire piece

Other items on the watchlist: Power shortages, Social indicators, Farm pricing policies

Click here for the full coverage at Business Standard.