Indian Economy Shows Signs Of revival After Three to Four Years Of Prolonged Recession
By Y.B.K SeshagiriRao

The Indian Economy is showing signs of revival, after three to four years of a prolonged recession. The auto, cement, steel and power sectors, some of the core building blocks for any economy , seem to be experiencing a pick-up in demand. With a steady revival it is expected that the growth rate would touch seven percent during the current financial year. Industrial production has grown by 7.2 percent for May compared to 3.4 percent in May 1998 and it is expected that industry would be better this fiscal. The boom in consumable durable sector seems to indicate that the purchasing power is buoyant. India's export growth of six percent recorded for April and May is far above that of the Asian countries like Malaysia and Taiwan who recorded 4 percent growth rate while most others excluding Philippines recorded a growth rate of one to two percent. Inflation is down to 1.62 percent as on July 17. This was the lowest inflation rate recorded since August 1982 when it stood at 1.62 percent.

It was for the first time in 17 years that inflation rate had plummeted below the two percent mark when it touched 1.83 percent on July 3. The bumper crop of wheat, oil seeds and pulses had precipitated this decline in the inflation rate.

The capital market is buoyant. The Sensex of the Bombay Stock Exchange (BSE) has touched an all time record of 4810 points in July. The extent, speed and width of the rally caught the BSE operators off guard . It was in September 1994, the sensex had crossed the 4670 points mark and created a record. The upward mark of the index has been aided by all around euphoria that the Kargil conflict is over. The rally was also backed by two fundamental factors. The first was the indications of a turn-around in domestic economy and the second was a steady inflow of Foreign Institutional Investors(FIIS) , who have pumped in more than Rs.1000 Crores into the stock markets during July alone. According to K.R.Bharat, CEO of C.S. First Boston "the sensex should touch a level of 5500 by March 2000 as the corporate results would be showing marked signs of improvement. Sector play is over and re-rating of a sector is not likely to take place soon" India's ranking among 174 countries has improved to 132 as against 138 last year in terms of Human Development Report (HDR) published recently by the United Nations Development Report(UNDR). The rankings are based on a combined measure of life expectancy , educational attainment of the population, and its ability to buy basic goods and services. According to HDR, many of the reasons for India's improved ranking lie in the fact that it has " joined the newly industrializing East Asian economies, attracting foreign investment and taking advantage of global technological advances".  However, the data reveals that India is slipping very rapidly in the area of education and the goal of primary education for all Indians, remains a distant mirage.

The HDR findings are interesting as well shocking:

• The combined wealth of the three richest people of the world is more than the thirty six poorest countries combined. Women occupy over thirty percent of parliamentary seats in just five countries. In 31 countries they occupy less than five percent.

• Eighty eight percent of internet users live in industrialized countries which represent only seventeen percent of the world population. A computer costs the average Bangladeshi over eight years' income, compared with just one month's wage for the average American.

• One percent of the wealth of the 200 richest people, or $8 billion, could provide universal access to Primary education for a year.

The International Credit rating Agency 'Moody's Investor services' is likely to retain India's sovereign rating as "stable" despite signs of recovery in the economy. According to Moody's the union government has not been able to control the fiscal deficit which could have an adverse impact on the entire economy. Moody's has also projected a bleak outlook for the Indian banking sector as it continued to be plagued by high level non-performing loans and incomplete reforms. The slow legal system and inappropriate legislation prevented banks from recovering bad loans says Mood's report on 'Banking system out look' for India.