India and the Global Economy

By: EconomyWatch Content   Date: 13 April 2010

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India, an emerging economy, has witnessed unprecedented levels of economic expansion, along with countries such as China, Russia, Mexico and Brazil. India, being a cost effective and labor intensive economy, has benefited immensely from outsourcing of work from developed countries, and a strong manufacturing and export oriented industrial framework. As the economic pace is picking up, global commodity prices have staged a comeback from their lows and global trade has also seen reasonably healthy growth over the last two years.

 

Economic Prospects for 2010

The global economy seems to be recovering after the recent economic shock. The Indian economy, however, was hit in the latter part of the global recession and the real economic growth has witnessed a sharp fall, followed by lower exports, lower capital outflow and corporate restructuring. The global economies are expected to continue to sustain themselves in the short-term, as the effect of stimulus programs is yet to bear fruit and tax cuts are working their way through the system in 2010. Due to the strong position of liquidity in the market, large corporations now have access to capital in the corporate credit markets.

 

 

India’s Economic Outlook Projection

 

 

 

 

 

 

 

 

2007

2008

2009

2010

 

 

 

 

 

 

GDP Growth 

 

9.40%

7.30%

5.40%

7.20%

CPI

 

6.40%

9.30%

5.50%

4.90%

 

Indian Economy 2010

In order to keep up the economic growth during times of the worst recession, government authorities in India have announced the stimulus packages to bolster economic growth. To finance the stimulus packages, the Indian government has raised over $100 billion over the last four quarters. The country’s public debt, according to the Reserve Bank of Indian (RBI), has zoomed to more than 50% of the total GDP and the RBI has started printing new currency notes.

Central Government Debt

 

in Rs. Crores (10 Million)

Q3 2008

Q3 2009

% of GDP

 

 

 

 

 

 

 

 

 

Public Debt (Sum of 1 and 2)
2,099,286.23
2,505,450.74
50.71%

 

 

 

 

1. External Debt
237,351.77
294,941.67

 

 

 

 

 

2. Internal Debt
1,861,934.46
2,210,509.07

 

 

 

 

 

 

  


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