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Global recession- Is the worst over or the risks still remain?

Today's GD topic: Global recession-Is the worst over or the risks still remain?
The Indian economy has developed the resilience to absorb internal and external shocks after emerging out of the global financial crisis better than most other countries, but challenges remain.

RBI recently expressed satisfaction that Indian economy has bounced back to its pre-crisis growth trajectory, at 8.9 per cent in the first half of 2010-11.

India has a huge presence at this year's World Economic Forum meeting, being held currently in Davos, with bullish bosses hailing a booming economy. Despite the worldwide slowdown, India has continued to surprise. In the past few months, India has had visits from all the leading lights of the world, the top five countries have visited India in the past months. 20 billion dollars in deals have been signed. The Indian economy has developed the resilience to absorb internal and external shocks after emerging out of the global financial crisis better than most other countries, but challenges remain. In this background we analyse the topic Global recession: Is the worst over or the risks still remain. Herewith we present to you the statements that will help you speak on your specific stand on this topic. Yes, the worst is over -- The Reserve Bank of India recently expressed satisfaction that Indian economy has bounced back to its pre-crisis growth trajectory, at 8.9 per cent in the first half of 2010-11, powered by domestic factors, including good agricultural growth and rising exports. The central bank expects the country's growth momentum to persist in the coming years, on the back of robust corporate sales and healthy tax collections, along with a booming service sector. -- Nations wealth is beginning to trickle down to the less fortunate in society. With growth of around nine percent you have a huge amount of resources available which were not available in the early nineties. Social sector, education, health care, food security are getting a boost. All the investment is starting to have an effect, in terms of money in the hands of the bottom third, which also gets spent creating demand for products and services. It's creating a virtuous circle.

-- India has nothing to fear from competition from other emerging giants. India has the potential to co-exist well with China and Brazil. There is no need for one to beat each other. As long as all these economies grow, it provides the world with opportunities. -- There are going to be more jobs in 2020 than currently expected. -- There are no doubts about the long-term potential of India, an economy that is growing at close to 10% a year. Plans for USD 1.5 billion in infrastructure spending and fast-rising middle class incomes underpin the longer-term potential for the market. No, its not yet over, many risks still there for the economy -- Global economists warn that creaking infrastructure and wealth gaps could stifle Indias stellar rise. This is a persistent threat to India's rise to global economic powerhouse status. According to a survey of some 1,200 business leaders conducted by financial services firm PricewaterhouseCoopers, nearly nine in 10 said the inadequacy of India's infrastructure was a threat to growth. -- India's biggest challenge, according to many Davos participants, is bridging a growing gap between the haves and the have-nots, as it struggles with the world's second-largest population and crippling rural and urban poverty. -- Soaring inflation and rate rises are hitting corporate margins in India, tempting more foreign fund managers to slash holdings in favour of markets that can better capitalize on the global economic recovery. -- With the US recovery finally looking more sustainable, investors are rebalancing portfolios by rotating more cash into Western markets, or to commodity-heavy markets like Russia or South Africa which gain as oil and metals prices rise. -- All this is bad news for India which is increasingly relying on short-term portfolio flows to plug a current account gap of around 3.5% of GDP and likely to widen more under the impact of USD 100 a barrel oil prices. -- Global investors are bracing for the end of China's relentless economic growth, with 45% saying they expect a financial crisis there within five years. In this view India should analyse its all present risks and also calculate in advance the future risks to avoid future shocks

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