Elusive revival
A strong recovery for the Indian economy is still some way off
Has the Indian economy turned the corner? The past few weeks have seen a stream of positive economic news—from the easing of inflationary pressures to a pick-up in car sales to the unexpectedly strong quarterly results announced last week by Reliance Industries Ltd. The revival in the monsoon has perhaps made the risks of a drought less acute. Global crude oil prices have eased. The latest trade data has also provided reason for optimism.
However, a sustained economic recovery is a complicated task if we look at the underlying trends. The government has committed itself to fiscal compression. Inflation is still enough of a problem for the Reserve Bank of India to shy away from rate cuts. Investment activity is still weak. The global economic recovery is uneven.
A year after the run on the rupee forced policymakers to focus on economic stabilization, the economy looks less fragile. But a strong recovery is still some way off.
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