There was a time, say even six months back, when most analysts were loath to associate India with anything but a minimum 7% growth of the economy. Alas, those were the days.
The latest data released on the gross domestic product reports a growth of 5.5% in the first quarter ended June—marginally above the low of 5.3% notched up in the previous quarter. It was the former chief economic adviser Kaushik Basu who had, in the face of a sustained rise in inflation, talked about a new normal of 7%. As things turned out, it was retail inflation that was even higher than Basu’s new normal. Now, economic growth is plumbing new lows. Below 5%, the country will be back to the infamous “Hindu” rate of growth. With Europe on the boil, domestic policy and political paralysis, and completely wonky macroeconomic fundamentals, there is a good chance this may happen. So it’s time to resize expectations.
A file photo of Kaushik Basu