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India becomes engine of world growth

12-30-2010 08:55 BJT Special Report:Developing Asia Leads Global Recovery |

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While western economies struggled in 2010, Asian economies kept the world afloat. One engine of growth is India. With growth expected at nine percent for the year, the future looks even brighter. But what's behind this robust performance?

This quaint market in South Delhi is symbol of India’s growth and aspirations in many ways. In these alleys you find young Indians bursting with ideas. One such young Indian is Nidhi. Nidhi turned an entrepreneur this year when she opened this store with her friend. The concept is simple – to showcase artists and designers who do different work but don’t have a place to do so.

Nidhi Ajmani Banerkee, Owner of O' Layla, said, "Lots of people come back to me and tell me I have inspired them to do something more because after sometime you have to discover your own passion, and entrepreneurship is in our blood. A lot of my family members were entrepreneurs and I just feel it was my calling in life to go back to it."

Year 2010 has seen India moving on from the status of an emerging economy to an emerged one.

The Indian economy roared back in 2010, with the GDP, growing at 8.6 per cent in the first quarter of January till March and then going up a notch closer to nine per cent in the next two quarters of April to June and July to September.

Industrial output indicators though were erratic. But the overall outlook remained bright, with industrial growth set to be in double digits and good a monsoon brightening the prospects of agricultural production.

Foreign Trade also showed robust growth. Indian exports grew at 36 per cent in the first quarter of 2010 and later slowed down to 27 per cent in the subsequent two quarters, but the figures were much better than 2009.

Indian stock markets saw big money coming being pumped in by foreign institutional investors as other western markets just didn’t offer opportunities.

These payments in form of investment in the Indian stock markets made up for the sharp fall in inflows from foreign direct investors and this directly helped India’s balance of payment situation.

Ashok Desai, Consulting Editor of Businessworld, said, "There was a time when we used to face so many problems. We used to face the crisis of balance of payments. The economy used to meltdown and we had to rush to the World Bank to borrow money. Now that hasn't happened since 1991."

The biggest concern arose from inflation, which the Indian government failed to tame for almost all of 2010. Inflation was well above 10 per cent for the first three quarters and declined to around 9 per cent only in the last quarter. The Government now hopes that the inflation rate would decline to 5.5 per cent by the end of March 2011.

Economists believe year 2011 will be another key year where India could attain the magic growth figure of 10 per cent.

Ashok Desai, said, "The economy is doing well and everyone seems optimistic. If entrepreneurs are optimistic and they invest more, and that is what acts like raw material. So if we have the raw material we can achieve the magic figure."

"As the sun sets on the year 2010 and 2011 beckons the next decade looks even more promising for the Indian economy and a large part of the credit goes to small entrepreneurs who helped the economy bounce back this quickly. Shweta Bajaj, CCTV, New Delhi, India."

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