Country Report India July 2009

Outlook for 2009-10

• The scale of the Indian National Congress party's victory in the April-May 2009 general election means that the Economist Intelligence Unit expects the new government to be cohesive and durable.
• The Mumbai terrorist attack in November 2008 significantly heightened tensions between India and Pakistan, and normalising bilateral ties will remain a difficult challenge for the Indian government.
• Congress's continuation in power means that economic policy will remain broadly unchanged. Priority will continue to be given to mitigating the effects of slowing economic growth and to measures targeting the rural sector.
• The more dominant role that will be taken by Congress in the new governing coalition means that there is scope for further progress on economic reform, although internal party dynamics mean that this is by no means guaranteed.
• Real GDP growth is forecast to slow to 5.5% in fiscal year 2009/10 (April-March) owing to the global recession. Economic growth is forecast to accelerate to 6.4% in 2010/11.

Monthly review

• On June 4th the government announced its agenda for its second five-year term. The expansion of nine state-run social welfare programmes, notably the National Rural Employment Guarantee scheme, will be paramount.
• On June 3rd parliament elected Meira Kumar as the new speaker of the Lok Sabha (the lower house of parliament). She is a dalit (formerly ???untouchable??? in the Hindu caste system), and the first woman ever to hold the post.
• The finance minister, Pranab Mukherjee, has said that he hopes to keep the official fiscal deficit target at 5.5% of GDP in 2009/10, despite the implementation of continued fiscal stimulus measures to boost the economy.
• The government plans to issue guidelines on public listings of state-owned firms. The National Mineral Development Corporation and the National Thermal Power Corporation are among the firms slated for part-privatisation.
• Year-on-year inflation as measured by the wholesale price index was negative for the first time in three decades in the week ending June 6th, when wholesale price inflation ran at -1.6%.
• A range of financial indicators are raising hopes that the worst of the economic downturn may be over. In June the main stockmarket index was trading 40% above its April level, and the rupee has also appreciated.
• Industrial output rose by 1.4% year on year in April, driven by public infrastructure spending and construction projects.

Source: Country Report

This report covers the following industry codes:
SIC Code: 37;60;49;39;53;70;48;2834;80;20;10
NAICS Code: 336;52;22;31;44;72;517;3254;62;311;212