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Where the growth in Q1 came from

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

GA man walks his cow under high-tension power lines leading from a Tata Power sub station in Mumbai's suburbs February 10, 2013. REUTERS/Vivek Prakash/FilesDP growth of 5.7 percent in the April-June quarter was unexpected in view of the southward drift of India’s economy over the past two years. No wonder it pepped up the Bharatiya Janata Party-led government at a time when the ruling coalition is listing its achievements after 100 days in office. The question is where this growth came from and whether it will be sustained in future.

India’s economy has been slowing after achieving 9 percent growth three years ago. That was because the Congress-led government failed to fuel the economy. The absence of policy reforms, paralytic governance – combined with persistent inflation – discouraged investment. Growth tapered to 4.7 percent last year.

The Q1 data seems to signal a recovery with growth jumping to 5.7 percent. Some sectors did perform exceedingly well with over 10 percent growth. The first is electricity though its size in the overall economy is small. But it has now come up against stubborn problems like coal shortage, which has harassed the power sector. Coal production is unlikely to increase and the power sector will have to fall back on imports. The 10 percent increase in power generation contributed 3.4 percent to the increase in GDP in the first quarter.

Business services such as finance, insurance, and professional services like IT also exhibited high growth. This sector is a major contributor to GDP and constitutes nearly a fifth of the economy, and developed at a double-digit rate. Consequently, about a third of the increase in GDP has come from this sector alone.

India Markets Weekahead: Wait for post-budget opportunities

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

Markets were fairly volatile last week, reacting to tough measures taken by the Narendra Modi government to get India’s economy back on track amid worries over monsoon rains and the situation in Iraq.
cfcd208495d565ef66e7dff9f98764da.jpgLong-term investors hailed the hike in railway freight and passenger fares as a step in the right direction to bring down indirect subsidies. However, the government rolled back the hikes on suburban fares to a large extent due to political considerations.

Monsoon rains have started on a weak note but if the rains pick up in July and the El Nino effect is tempered, it would have a direct impact on inflation and interest rates.

Nehru’s last stand?

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(This piece comes from Project Syndicate. The opinions expressed are the author’s own)

The victory of the Bharatiya Janata Party and its leader, Narendra Modi, in India’s general election last month has raised a crucial question about the country’s future. With the BJP sweeping to power on a platform of aggressive nationalism and business-friendly corporatism, has the socioeconomic consensus dating to India’s first prime minister, the democratic socialist Jawaharlal Nehru, come to an end?

The primacy of good governance for Modi

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

At his second cabinet meeting, Prime Minister Narendra Modi unveiled a 10-point programme that set out a comprehensive agenda for his ministers. The agenda is a good cocktail of short-term needs and long-term objectives.

The underlying message, however, is of good governance. That is what Modi has been harping on during his election campaign and which he sincerely believes is the secret of his success in Gujarat.

Markets Weekahead: A decisive mandate for equities

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

Not even exit polls could have predicted the landslide election victory that ‎has put the BJP’s Narendra Modi in the driver’s seat for India.

The Nifty, after the initial euphoria of a 6 percent upswing, ended Friday at 7203, merely 80 points higher than the previous day. It was a typical “sell on news” phenomenon.

Challenges ahead for Narendra Modi

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

Supporters of Hindu nationalist Narendra Modi, prime ministerial candidate for India's main opposition Bharatiya Janata Party (BJP), wear masks depicting Modi outside their party office in MumbaiThe swearing in of Narendra Modi as India’s next prime minister is imminent. Voters have given the BJP an overwhelming majority and the party is all set to form the next government on its own.

Modi, who ran a blistering campaign on the promise of better governance and a crackdown on corruption that had progressively hobbled the Congress-led UPA government, raised huge expectations among a jaded and weary populace.

Debating India’s election cheat sheets

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

As the sun set on the final phase of polling in India on May 12, newsrooms were waiting impatiently for 6.30 p.m. — the deadline set by the Election Commission for airing survey results on post-poll predictions.

Elaborate studio sets packed with guests and news anchors flanked by psephologists armed with data sets were all waiting to declare that Narendra Modi is coming to Delhi.

The Modi view on security issues

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

A Sadhu or a Hindu holyman wears a badge with an image of Hindu nationalist Narendra Modi, prime ministerial candidate for India's main opposition Bharatiya Janata Party (BJP), outside an ashram in Ayodhya, Uttar Pradesh May 6, 2014. REUTERS/Anindito MukherjeeResults of the five-week general election will be announced on May 16, with the Bharatiya Janata Party (BJP) led by Narendra Modi favoured to win.

Thus Modi’s views on major security and strategic issues facing India acquire greater salience.

India’s next foreign policy

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(This piece comes from Project Syndicate. The opinions expressed are the author’s own)

A guest holds the flags of the United States and India and a program in the East Room at the White House in Washington, November 24, 2009.     REUTERS/Jim Young/FilesNext month, India will complete its marathon election. A new government is expected to assume power at the end of May, and, if the polls prove correct, the Bharatiya Janata Party (BJP), which has named Narendra Modi as its prime ministerial candidate, will lead that government.

Steps the next government should take

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

India’s economy is tottering, inflation is too high and growth too low. The Congress-led UPA government allowed the economy to drift during its second term. Why? Because it did not focus on real issues, failed to govern effectively and did not carry out any significant reforms.

New legislation became almost impossible, with coalition partners such as the TMC and DMK threatening to pull out (and they eventually did). On top of that, successive scams made it impossible for the government to function normally.

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