India’s economy is growing at the slowest pace in a decade, companies are burdened by record debt and governance is so bad that even local cement billionaire Kumar Mangalam Birla is reluctant to invest in the country.
India’s latest economic data and a renewed bid to pare a record current-account deficit that’s spurred a rupee slide show stagflation conditions persist almost a year after the government started a drive to revive investment.
India plans curbs on some imports to pare a record current-account deficit and another push for capital inflows to stem the rupee’s slide, as a drop in factory output underscored the risks facing Asia’s No. 3 economy.
India allowed 13 state companies to raise as much as 480 billion rupees ($7.9 billion) selling tax- free bonds this financial year, helping generate funds for infrastructure such as roads, ports and power plants.
Indian leaders often warn that they need to shift the majority of their country’s population -- almost 70 percent -- from rural to urban areas. “Our salvation,” Prime Minister Manmohan Singh claims, “lies in moving people out of agriculture.” Finance Minister P. Chidambaram confirms, “My vision is to get 85 percent of India into cities.”
Raghuram Rajan, whose 2005 warning of a financial crisis was described as “Luddite” by former Treasury Secretary Lawrence Summers, now has the chance to fix another fault line: one caused by foreign-capital flight from India.
India said 20 heavily-armed “terrorists” along with men dressed in Pakistan army uniforms killed five Indian soldiers along the border in the disputed region of Kashmir, in a blow to efforts to resume peace talks.