The global economic growth experienced by India in the last quarter of the year has been quite impressive, to say the least. There are a few indicators that we can use to estimate the economic growth, and this quarter was no exception. One indicator that we can use to measure economic growth is Purchasing Managers Index (PMI). The Purchasing Managers Index measures the performance of manufacturing in the Indian economy against a similar scale. So, for every $1000 of gross domestic product (GDP), the index of this indicator is calculated.
The current economic growth recorded by India was a major boost to the market sentiment, and this was further enhanced by the Reserve Bank of India (RBI). At the end of the quarter, the economists had predicted economic growth of 6.3%, which is an excellent growth rate. Looking at the current scenario, we can see that the current economic growth is outpacing the earlier patterns. In fact, the earlier phases of economic growth witnessed a much higher rate of inflation, and this was mainly due to the boom in the private sector. With the current recession, the inflation levels are coming down, and the government is offering monetary incentives to help its citizens.
The current economic growth has benefited a lot of industries, both small scale and large scale. The consumer spending has seen a huge boost, and this is one of the main reasons behind the economic growth. When the consumers spend money, more businesses get the opportunity to make profit. Also, when there is more business, more jobs are created, which in turn leads to more economic growth. The recent strengthening of the dollar in the global economy is another important factor behind the rise of the Indian economy.
The industrial growth has been the other aspect that has received a lot of attention. India is the second largest manufacturer of computers after China, and this statistic has been corroborated by the economists. The third and fourth quarters of the year have witnessed an increase in industrial production. Also, this is the time when the new projects are being launched and implemented. The infrastructure projects, which are underway, will also see a great boost during the upcoming quarters. With the coming of the fiscal year, the fiscal deficit would start coming down and this will go a long way in boosting the economy.
The fourth quarter of the fiscal year is considered to be a quiet period in the Indian economy. At the time, the investors seem to be waiting for some positive indicators before they invest again. However, with the economic growth not picking up as predicted, the investors might start losing their confidence. If the economic growth continues to remain slow, then it would take quite some time to rebuild the investor's confidence in the economy.
It is evident from the above that the market sentiment is sagging off. However, the . . . . . . rise in consumer spending and the worsening fiscal situation are the factors that are expected to pull the economy towards recovery. Given the low interest rates and the availability of cheap money in the banking sector, the business activity has picked up. This will definitely help businesses in improving their cash flow. Given the current scenario, there is no need to stress about the economic growth.