Expert Zone

Straight from the Specialists

How to get India on the highway to high growth

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

The president’s address to parliament this week lays out the new government’s roadmap to get India’s economy back to high growth. That will take time and is not easy either.

True, the BJP government led by Narendra Modi inherited a weak economy – growth was a mere 4.7 percent; industry was static; there was no employment generation; and inflation was at over 8 percent. The only comfort was that foreign exchange reserves exceeded $312 billion.

New concerns have also emerged. The India Meteorological Department has confirmed that this year’s monsoon will be 93 percent of the long-term average and will hit production of rice and horticulture, particularly in the south and the north-east. This will raise food inflation further, reduce exports of agricultural commodities as well as part of the demand for industrial goods, and delay an upswing in the investment cycle. It will, therefore, take a little longer to get the economy back on the rails.

The roadmap, however, is clear. The government has identified five complementary ways to create an environment that will foster growth.

The reform club

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

That custodian of the English language, the Oxford English Dictionary, describes a bubble as “anything fragile, unsubstantial, empty or worthless; a deceptive show”. Could this description apply to the current frenzy for “reform” that is seemingly sweeping the global economy? The answer is “yes, in part”. While there are some genuine attempts at reform, market expectations for reform will inevitably be disappointed in some parts of the world.

The global financial crisis has prompted politicians to advocate economic reform in two ways. First, the crisis demonstrated that the status quo needed to be changed — and in many cases that change required sizeable structural change. Second, as the structure of the world economy has changed (lower global capital flows, slower global trade, etc.) so economies have had to adapt the way that their economies are structured.

India’s current account deficit: solution lies in exports

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

The U.S. dollar is the major currency for international trade. Most countries use it to pay for their imports and also peg the dollar for exporting products and services.

The balance of trade (net import or export) would determine if a country is a net payer or a receiver of dollars. Trade, along with other dollar inflows (portfolio/FII, FDI, inward remittances), determines the overall availability of the international currency for a country to engage itself in the global economy. This also has a bearing on determining the exchange rate of a country’s own currency with that of the dollar.

Can BRICS evolve into a power bloc?

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

The fourth BRICS meeting held in New Delhi on March 29 did not end with mere rhetoric; it agreed to some substantive mutual arrangements that would promote common interests.

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