The Mint Report for 31 May 2012

The Mint Report for 31 May 2012

India’s economy has performed far worse than most expectations. New fourth quarter GDP numbers out on Thursday seem to confirm the greatest fears among economists. They show an unexpectedly small GDP growth of 5.3% for the March quarter. That brings the overall GDP growth for the full fiscal to a mere 6.5%.

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India’s GDP growth plunges; cabinet approves National Telecom Policy; markets fall on Thursday

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And there’s one small spot of good news for India’s economy. The country’s fiscal deficit for 2011-12 stands at 5.7% of GDP. That’s compared to the budget estimate of 5.9% of GDP. Of course, while these numbers show some promise, they’re well above the comfort zone. The government is targeting a fiscal deficit of 5.1% of GDP for the current fiscal.

And in other news, India’s telecom industry could be up for an overhaul. On Thursday the cabinet approved the National Telecom Policy along with a few modifications of its own. The new policy will separate licenses from spectrum. It will also aim reaching a 70% teledensity by 2017 and 100% by 2030. Also, the government plans to review the Trai Act and retain the job of making policy. Finally, the policy authorizes the Department of Telecommunications to finalise the Unified Licensing Regime. The new telecom policy comes even as the industry is in a state of turmoil after the 2G scandal.

And finally, with GDP numbers so bad, India’s already battered markets had little chance of making gains. The Sensex dropped 94 points to 16,219. And the Nifty lost 26 to close at 4,924.

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