India’s GDP growth rate fell to 5 percent in fiscal year 2013, according to the OECD. The WSJ reports:
The OECD’s composite leading indicators for January continued to point to acceleration in the U.S., Japan, Germany and China, as well as the euro zone as a whole. But the leading indicators point to sustained weaker growth in India. […]Prime Minister Manmohan Singh last week said businesses are being “unduly pessimistic” about the country’s economic outlook, and said the slowdown will be temporary.The New Delhi government has since September taken steps to boost growth. It has eased foreign-investment rules in the retail, civil aviation and broadcasting sectors, and has reduced fuel subsidies to improve its fiscal health. But further steps to open up the economy may face political opposition within the governing coalition.
Slow growth is a problem for India’s embattled Congress Party-led government and its most likely nominee for Prime Minister, Rahul Gandhi. Gandhi seems to have few ideas about how to get the economy churning again; during a speech to business leaders a few days ago he offered only clichés and confusing generalizations about India’s economy. Narendra Modi, Gandhi’s likely rival for the top job in elections next year, on the other hand, is famed for his pro-business and growth-oriented policies.Sometime over the next year, Congress better hope that Prime Minister Singh can engineer a return to growth (no easy task given the governing coalition’s fraying at the seams), or that Gandhi can pick up enough fresh ideas to compete with Modi. Otherwise the BJP is going to pounce on what seems to be widespread disillusionment with Congress’s poor handling of the economy.