Current state of the economy : Moderate recovery in FY 2015 and beyond
After achieving strong growth of over 9 per cent for three successive years between 2005-06 and 2007-08 and recovering swiftly from the global financial crisis of 2008-09, the Indian economy went through lacklustre times that culminated in lower than 5 per cent growth of GDP for two consecutive years, i.e. 2012-13 and 2013-14. Sub-5 per cent GDP growth for two years in succession was last witnessed a quarter of a century ago in 1986-87 and 1987-88!
Happily, in 2014-15, the Indian economy has started showing signs of gradual improvement with business expectations, exports and industrial production recuperating. This more favourable outlook reflects stronger sentiment resulting from the new government’s promise to prioritize economic reforms and enhance the country’s business environment. Several decisive steps taken by the government like the industrial corridor development, 8,500 km road construction, 16 new ports, and broadened financing base, among others, aim to not only accelerate the pace of infrastructure growth, but also restore investors’ confidence.
Industrial corridors are likely to be the primary drivers of India’s growth in manufacturing and urbanisation. This, coupled with allowing 49 per cent foreign direct investment (FDI) in the defence sector and other such incentives provided in the budget, shall definitely provide a fillip to the manufacturing sector.
Infrastructure development, which is a key to bring back the strong growth momentum in the economy, received a boost when the Japanese government committed to invest 35 billion dollars over the next five years in India to build smart cities and finance infrastructure projects. Japan will also supply financial, technical and operational support to introduce bullet trains in India.[/vc_column_text][/vc_column][/vc_row]