India Will Not Fall Into Recession
Nov. 19 – Will India follow the United States, Japan and 15-nation Eurozone into a Recession? Government officials, economic and industry captains doubt it. While growth is expected to slow down in the subcontinet, the Indian government feels it has taken adequate measures to stimulate the economy offseting effects of the global economic slowdown.
India is likely to end the year with a satisfactory growth rate despite the downturn in advanced economies, Finance Minister P. Chidambaram told Reuters. "Next year, we will bounce back to a much better growth rate," he said, adding this could reach 9 percent by the second half of fiscal 2009/10. The lowest offical forecast for India's growth is seven percent for the year to March 2009, over three times forecast world expansion.
India's central bank has cut interest rates by more than a percent in the recent past and plans are afoot to cut interest rates furter to stem inflation. The central bank has cut its benchmark lending rate by 150 basis points to 7.5 percent in the last month as well as dramatically reduced the amount of cash commercial banks must hold in reserve to spur lending and growth. India inc's employeers are also retaining employees, at a time when most companies are showing workers the door.
Further steps to boost the economy during the downturn include expanding the limit of foreign direct investment allowed into the country in insurance, manufacturing, retail and telecom as well as forging bilateral and multilateral ties, not only with China and South east Asian nations but also with gulf countries. In addition India plans to drive growth through domestic demand and by protecting domestic industries. The indian government yesterday imposed a 5 percent import duty on a range of iron and steel products, and slapped a 20 percent duty on crude soybean oil imports to protect domestic producers in the face of falling commodity prices.
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