India continued to be ahead of China to maintain the world’s fastest growing large economy tag. India even after surviving numerous ups and downs during 2018 such as hike in oil rates and worldwide trade war like circumstances, maintained its position and tag throughout the year.
India remains fastest growing economy ahead of China despite ups, downs
The ups and downs ride of Indian economy in 2018 was best analysed by the GDP growth. It was mostly highlighted in the 2018-19 first quarter month ending 30 June 2018. The GDP grew at 8.2 per cent which was quite remarkable. Also, in the first three months of the year the GDP grew at 7.7 per cent.
But soon in the end of 30th September 2018, it was fallen to 7.1 per cent. Fitch Ratings dropped India’s GDP evolution projection to 7.2 per cent for the present financial year from 7.8 per cent anticipated in September, mentioning greater financing cost and reduced credit accessibility.
As per Rajiv Kumar who is the Niti Aayog Vice-Chairman, the Indian government in the year 2019 will focus on speeding up improvements and modifications with a vision to accelerate development.
Rajiv Kumar stated, “India will grow at around 7.8 per cent in the next calendar year and investment cycle that has already started picking-up will gather further strength and we will see more private investments”.
However, as per the experts, the restraining development might force the Indian government to pay out more in advance of the next general elections and this might lead to fiscal stresses.
International factors which affected the GDP of the Indian economy are: unexpected increase in crude oil prices (which are now in control), consolidation of US dollar, reduced speed of development in the wake of US-China trade conflict and for the fourth time in a year the US Federal Reserve increased the interest rate.
The 2018 year opened up with a bang which makes banking sectors to the limelight and ruled the headlines by pointing India’s biggest banking scam. On 14th February 2018, the Punjab National Bank said that it had discovered a Rs 11,400 crore scam where billionaire jeweller Nirav Modi supposedly attained fake letters of enterprise from a subdivision branch in Mumbai to protect his foreign credit from additional Indian creditors. The case has gather round a long political power, with the government building slight progress in fetching back the escaping suspect.
In the same way the year ended with a exceptional confrontation between the Reserve Bank of India and the Central government. The resignation of Urjit Patel after a few weeks later was perceived as a conclusion of the power struggle in December.
Though, the economy observed an immense optimistic growth and improvement prepared under the Insolvency and Bankruptcy Code. Tasked with helping recover unpaid,
the National Company Law Tribunal (NCLT) which was tasked to help in recovering the due corporate loans, has helped to resolve bankruptcy and liquidation records concerning more than Rs 60,000 crore during the month of Apirl and September 2018-19.
A speedily denigrating rupee and suddenly increasing petrol prices played chaos with India’s current account deficit (CAD). In the second quarter of the financial year, it extended to 2.9 per cent of the GDP associated to 1.1 per cent in the year before period, largely due to a huge trade shortfall.
Rating agency Fitch in a report said, “The widening of the current account deficit amidst tighter global financing conditions should put downward pressure on the currency, and we forecast the INR to weaken to 75 against the dollar by end-2019”.
Even after so much fall the good news for the economy was that India has upgraded its ranking for the second straight year on the World Bank’s ‘ease of doing business’ report. India reached to 77th position on the back of improvements associated to bankruptcy, fiscal policy and other areas.
