Friday, October 24, 2008

Performance of the Indian Economy during 2007

1. Introduction
The present article on the performance of Indian economy is based upon various reports, produced by various government agencies, international and national donor agencies and think-tanks, and reports which flashed out in the media, during various points in 2007. In most of the reports, it has been pointed out that Indian economy's performance has remained comparable to China. But it has also been increasingly felt that the slowdown of the US economy can adversely affect other economies, particularly the economies from South-East Asia, and may be—India. India has recently faced problems like rise in food prices and hike in the price of crude oil at the international level. Moreover, Indian economy is constantly struggling with its under-performing agricultural sector. According to the Annual Report of the Reserve Bank of India 2006-07, since the mid-1990s, the growth of the agricultural sector has been low as well as volatile; the agricultural growth decelerated from an annual average of 4.7 per cent per annum during the 1980s to 3.1 per cent during the 1990s and further to 2.2 per cent during the Tenth Plan period. Despite this, policy-makers are hopeful that Indian economy will grow at 9 % during 2007-08. There have been various steps taken up by the Government of India in order to curb inflation and promote growth, but during the 11th Five Year Plan, the main goal has been to achieve 'inclusive' growth. There have been papers and articles, written in various newspapers and journals, regarding the current state of the Indian economy, and the worth of India pursuing the goal of 'equitable' growth. For a comprehensive idea about the state of Indian economy, kindly have a look at the table 1, provided above. The present article provides a cursory look at the performance of the Indian economy during the year 2007.

2. Annual Policy Statement of the Reserve Bank of India
The Reserve Bank of India (RBI) while unveiling the Annual Policy Statement, during April, 2007, for the fiscal year 2007-08 has lowered the growth forecast for 2007-08 to 8.5 per cent and promised to keep the inflation close to 5 per cent. While announcing a feel-good policy, the RBI has taken a number of initiatives toward capital account convertibility and encouraging hedging of price risk on global commodity exchanges. The RBI Governor YV Reddy has put in place measures to develop the corporate bond market, futures contract, establishment of credit information companies and a number of steps to help distressed farmers and to promote micro-finance. The RBI Annual Policy Statement has proposed to expand the range of hedging tools available to the market participant, and also facilitate dynamic hedging by the residents. The RBI wants to include corporate bonds in the repo market after stabilising trading platforms for this purpose and a robust settlement systems. The RBI has kept the bank rate unchanged at 6 per cent, short-term repo rate at 7.75 per cent, and cash reserve ratio at 6.5 per cent. The RBI has said that the role of the monetary policy will be to reinforce emphasis on price stability and well-anchored inflation expectations, while ensuring a monetary and interest rate environment that supports export and investment demand for boosting growth. It has also re-emphasised credit quality and orderly conditions in financial markets for securing macroeconomic and financial stability, while ensuring greater credit penetration and financial inclusion. India's CEOs (chief executive office) and CMDs (chief managing directors), according to a survey study by Associated Chambers of Commerce and Industry of India (ASSOCHAM), especially from the real estates, automobiles, housing finance, banking and financial services, were worried about the yet to be released Annual Monetary Policy of the Reserve Bank of India (RBI).

3. Health of the Indian Economy
According to the Reserve Bank of India's document 'Macroeconomic and Monetary Developments: Mid-Term Review 2007-08', which was released on 30 October, 2007, Indian economy continued to maintain strong growth momentum during the first quarter of 2007-08 due to the sustained performances of the manufacturing and services sectors. However, India saw consumer price inflation and deceleration of the infrastructure sector. Consumer price inflation (CPI) remained strong during the second quarter of 2007-08 and continued to be above the wholesale price index (WPI) inflation, thereby reflecting the impact of higher food prices. The wholesale price index (WPI) came down from 4.4% by June 2007 to 3.1% by October 13, 2007. The report says that the real gross domestic product (GDP) growth stood at 9.3% during the first quarter of 2007-08 as compared with 9.6% at the same period in 2006-07. During April-August 2007, the index of industrial production (IIP) rose by 9.8% as compared with 11% recorded during the corresponding period of the previous year. Manufacturing sector saw a growth rate of 10.3% in April-August 2007. The services sector faced a growth rate of 10.6% in April-June 2007. The Mid-term Review consists of two parts: Part I Mid-term Review of the Annual Statement on Monetary Policy for the year 2007-08; and Part II Mid-term Review of the Annual Statement on Developmental and Regulatory Policies for the Year 2007-08. The Report has retained the GDP growth forecast at 8.5 percent during 2007-08, assuming no further rise in international crude prices and barring domestic and external shocks. The real GDP growth during the first quarter of 2007-08 is placed by the Report at 9.3 percent as against 9.6 percent in the corresponding quarter a year ago. According to the Report, merchandise exports rose by 18.2 percent in US dollar terms during April-August 2007 as compared with 27.1 percent in the corresponding period of the previous year, while import growth was higher at 31.0 percent as compared with 20.6 percent in the previous year. India's foreign exchange reserves increased by US$ 62.0 billion during 2007-08 and stood at US$ 261.1 billion on October 19, 2007. The rupee appreciated by 10.3 percent against the US dollar, by 2.4 percent against the euro, by 5.4 percent against the pound sterling and 7.1 percent against the Japanese yen during the current financial year upto October 26, 2007. The appreciation of rupee vis-a-vis the dollar has also adversely affected the business process outsourcing (BPO) industry in India, according to some economists. The Ministry of Finance, Government of India during September, 2007, asked all Central Ministries and Departments to effect a 5 % cut in their non-Plan expenditure sanctioned in Budget 2007. The revenue collections have shown remarkable buoyancy during the initial months of the financial year, with direct taxes growing by over 40 %. The Government of India had pegged non-Plan expenditure during 2007-08, 6.5% higher at INR 4,35,421 crore. All Central Ministries and Departments have been asked to curtail the allocation by 5 % as the Government of India has to find resources for priority schemes. The mandated Fiscal Responsibility & Budget Management (FRBM) Act targets also need to be met, under which revenue deficit needs to be wiped out by the year 2008-09. The fiscal deficit has to be brought to 3.3 % of gross domestic product (GDP), and it has to be brought down to below 3% in 2008. The instructions emphasize that not more than one-third of the Budget estimates be spent in the last quarter of the financial year and the expenditure in March 2008 should not exceed 15 % of the estimates. Payment of interest, debts, salaries, pension and defence capital as also Finance Commission grants have been exempted from the 5% cut in the non-Plan expenditure, which is at the same level as slapped in 2006-07. These instructions mandate the government offices to reduce expenses to the "minimum essential" in areas like building maintenance, office equipment, transport, communication, furniture, furnishings, stationery and hospitality, regulate advertisements and publicity campaigns.

3.1 The Case for Manufacturing Sector Growth
The Confederation of Indian Industry (CII) released the July 2007 issue of 'State of the Economy' analysis for the last quarter-Q4 (Jan-March) results on 16 July, 2007. According to the CII 'State of the Economy', the impressive performance of the corporate sector is consistent, and has been led by the services sector. The July 2007 CII 'State of the Economy' has surveyed and analyzed results of some 3,283 firms comprising 1,971 firms from manufacturing, and 1,312 firms from services. According to the CII Survey, the impressive performance of the corporate sector continued in the last quarter of the financial year 2006-07, showing consistency with the GDP growth rate of 9.1 per cent achieved in that quarter (Q4). On almost all the parameters, the corporate sector has been doing better during Q4 in comparison to the same quarter in the previous financial year. The analysis shows that the net sales has recorded a growth rate of 19.35 per cent in the fourth quarter (Q4) as compared to the growth rate of 17.86 per cent achieved during the same quarter in the financial year 2005-06. The profit after tax (PAT) has registered a significant increase in the growth from 13.68 per cent in Q4 of 2005-06 to 19.12 percent in Q4 of 2006-07, owing to a lower rate of growth in input-cost and operating expenditures. The analysis finds that it is mainly the performance of the services sector that has resulted in the overall increase in the profits growth of the corporate sector. The services sector has recorded a significant decline in the growth of operating expenditure from 16.33 per cent to 10.41 per cent while showing an increase in the growth rate in net sales from 16.48 per cent to 24.74 per cent. 'The State of the Economy' Report has highlighted a distressing trend in the area of Agriculture - decrease in oilseeds production. In fact, oilseeds production, has registered a negative growth rate of 14.79 per cent. This is likely to lead to increase in the import of edible oil due to its reduced domestic production and rising demand. The demand is rising owing to the rising income levels and growing popularity of fast foods among the rich and upper middle class. It is interesting to note that the recently released index of industrial production shows declining growth rate for manufacturing to 11.9 per cent in May 2007 from 15.1 per cent in April 2007, which is in line with the warning given in this issue of the 'State of the Economy' about the lagged effect of the increase in interest rate. The dip stick survey done by CII on behalf of National Manufacturing Competitive Council (NMCC) to assess the impact of the rise in interest rates has reported negative impact on business due to the increase in the cost of financing. The Confederation of Indian Industry (CII) survey for April 2007- June 2007 over April 2006 - June 2006, which tracks the performance of the various sectors of the industry was released in September, 2007. The survey study showed that most sectors recorded a growth of over 10%. Out of a total of 101 sectors reporting production, 23 sectors recorded an excellent growth rate of more than 20 percent, 27 sectors recorded a high growth rate of 10-20 percent, 36 sectors registered moderate growth rate of 0-10 percent, while 14 sectors reported negative growth. The percentage of sectors in each category remained almost constant over the period April 2006 to March 2007, which reaffirmed that Indian manufacturing is on track. Almost 50% of the manufacturing sectors have shown above moderate growth despite various pressures in terms of the appreciating rupee and hardening of interest rates. According to the CII-ASCON survey, Cold Rolled Steel Strips, Pig Iron, Textile Machinery, Industrial Gases, Electric Fans, Microwave Ovens, to name few, are in the excellent growth category. One of the new entrants to the excellent growth category is Electric Two Wheelers in the auto sector showing growth of over 100%. Energy meters, Abrasives, Industrial valves, Machine Tools, Water equipment, Air conditioners, and Vanaspati were all in the high growth category. According to the CII-ASCON survey, out of the 27 sectors reporting sales, 6 sectors registered excellent growth, 11 sectors registered high growth, 4 sectors reported moderate growth, and 4 sector recorded negative growth.

3.2 A Room for Business Confidence
Business confidence in India slipped in the first quarter of the financial year by 8.8 per cent from the last quarter of the previous fiscal, according to the quarterly Business Expectations Survey for July 2007, which was conducted by the New Delhi-based economic think tank National Council of Applied Economic Research (NCAER). The survey study by the NCAER saw the Business Confidence Index falling across sectors for the second consecutive quarter. In April, 2007 the index had dropped by 3.8 per cent over its January, 2007 level. The NCAER report said the fall was more due to seasonal factors than the impact of the tight monetary policy. The fall, at 15.6 per cent, was the sharpest in the capital goods sector. Services saw a decline of 18.7 points, the intermediate goods sector 10.3 points, the consumer durable goods sector 6 points and the non-durables sector 4 points. Big and small firms showed less buoyancy than mid-sized firms. However, firms with more than INR 100 crore (INR 1 billion) turnover showed improved performance over the previous round. According to the newly released report titled 'Asian Development Outlook 2007 Update (ADO Update)' by the Asian Development Bank, which is based in Manila, Philippines, developing economies from Asia will register solid economic growth in 2007, driven by fast growth in the People's Republic of China (PRC) and India. The PRC and India, which together account for 55.3% of the total gross domestic product (GDP) in developing Asia, recorded their fastest growth in 13 years during the first half of 2007 and 18 years in fiscal year 2006, respectively.

4. EXIM Policy of the Government of India
The Annual Foreign Trade Policy for 2007-08 is considered to have pleased exporters in India because it promises refund of service tax on export goods. However the move can cost the exchequer an estimated INR 550 crore annually. The Third Annual Review of the Foreign Trade Policy 2004-09 saw the introduction of two export promotion schemes incentivising hi-tech exports as well as agro processing. It is expected that the refund of service tax on export goods, will encourage exporters meet the ambitious export target of US$ 160 billion during the fiscal 2007-08 (compared to US$ 125 billion in 2006-07). The policy prescription is vital since the US economy is seeing slowdown, the EU is facing static demand and the rupee is hardening vis-a-vis the dollar. The new foreign trade policy has tried to give impetus to exports of high-tech and agri-products by introducing new incentives and by expanding existing ones like the Vishesh Krishi and Gram Udyog Yojana. Other measures which were included are: extension of the export promotion capital goods (EPCG) scheme to spares and parts, flexibility in meeting export obligations under the EPCG scheme, expansion of the focus product and focus market schemes, extension of the DEPB scheme for a year, and a change in the categorisation of status holders. A new scheme is being worked out to replace DEPB, presently. India's exports have more than doubled in the last three years, and India's share in world trade has increased from 0.7% to 1.0% during the period. The inclusion of new countries (mostly from the CIS region) in the focus market scheme is expected to help India reduce its dependence on traditional markets like the United States (US) and the European Union (EU). In addition, new items like mica and its variety, barley, oats, soyabean, cigar/cheroots, bovine fat and copra have been included under the Focus Product Scheme, which gives a duty-free credit equivalent to 1.25 per cent of the freight-on-board (FOB) value of exports.

5. Indian Economy and the Rest of the World
In a study titled 'Benchmarking Developing Asia's manufacturing sector', which has been sponsored by the Asian Development Bank, Jesus Felipe and Gemma Estrada have tried to look at the growth of the manufacturing sector in various Asian countries. The study is quantitative in nature to arrive at certain policy related conclusions. The paper by Jesus Felipe and Gemma Estrada show that during the last three decades, most economies in developing Asia have undergone massive structural change, particularly in terms of changes in both output and employment sectoral shares. The rise in developing Asia's share in world manufacturing value-added, during the last three decades has been significant. The joint share of the People's Republic of China (PRC), the newly industrialized economies (NIEs), and ASEAN-422 has more than doubled since the 1980s, representing in 2000–2004 close to 14% of the world total. This rise has been due to a much faster growth of the manufactured value-added in this region—8–10% per annum since the 1970s—compared to the rest of the world. The share of the PRC (the highest among all developing economies) is just over 5% of the world's manufacturing value-added, significantly less than the shares of Japan or the United States (which is more than 20% each), while the share of India has barely risen. Growth in manufacturing value-added has been substantially higher than that of gross domestic product (GDP) in many economies in developing Asia, including India; the NIEs (except Hong Kong, China, which registered a contraction); ASEAN-4 (except the Philippines, which also registered a fall); as well as the economies under Other Southeast Asia-3 and Other South Asia. Several of the ex-Soviet republics (including Armenia, Azerbaijan, Kyrgyz Republic, Tajikistan) registered contraction in manufacturing value-added after the breakup of the Soviet Union. India's manufacturing output share has remained stable at about 15–16% since the 1970s, while the share of manufacturing employment has been at around 11% during the periods under consideration. In terms of labor productivity, there is still a large gap between most developing Asian economies and the OECD average. The product mix of new employment has been toward relatively lowproductivity industries. The increase in employment has taken place in low-productivity techniques. During the 1970s, food and beverages; textiles; and apparel, leather, and footwear accounted for about 39% of total manufacturing, while electrical and nonelectrical machinery and transport equipment accounted for about 17%. By the period 2000–2003, the former three accounted for a substantially lower 22%, while the latter three accounted for about 34%. This shows a very clear change in the structure of manufacturing production. The most salient conclusions that can be drawn from this paper, are as follows:

(a) The share of developing Asia in world manufacturing output has risen significantly since the 1970s. However, the rise is concentrated in a number of economies, mostly the NIEs, the People's Republic of China (PRC), Indonesia, Malaysia, and Thailand.

(b) The NIEs have started experiencing a de-industrialization process, particularly in the case of Hong Kong, China (in terms of both output and employment shares). This is the result of maturation of this economy and the transfer of production facilities to the PRC.

(c) There has been an important upgrading as the share of more technologically advanced manufactures has increased.
(d) The productivity levels of most developing Asian countries is below than that in the OECD countries, with the exception of NIEs.

According to an Annual Report by the United Nations Conference on Trade and Development (UNCTAD), which has been released recently, the economic outlook for developing countries is positive for the first time since the early 1970s, driven in large part by the growth in China and India. Developing countries–including many of the world's poorest nations–will see ongoing benefits from strong demand for primary commodities, and this positive trend in terms of trade since 2003 has allowed such countries globally to bolster investment in their economies. The Report noted that per capita gross domestic product has increased nearly 30 per cent between 2003 and 2007, compared to 10 per cent for the Group of Seven (G-7) highly industrialized countries. Overall, the world economy will mark growth for a fifth consecutive year, with a 3.4 per cent expansion this year. UNCTAD has warned that a major recession in the United States could lead to diminished exports for China and India. The Report also cautioned that North-South bilateral and regional free trade or preferential trade agreements could prevent poorer nations from developing their industrial sectors and reduce their control over foreign direct investment. UNCTAD has pointed to the positive feature of protection to infant and nascent industries by the first world nations, which hone their abilities to meet the challenges of international competition. The Report has called for intensified regional cooperation in exchange rate arrangements as a means to reduce the vulnerability of developing countries. The absence of appropriate global exchange rate arrangements could lead to exchange rate instability, especially in developing nations by impeding their overall competitiveness, according to the report. Regional collaboration could also benefit developing countries in terms of long-term development as it can help countries build up their economic capabilities to allow them to compete globally. Such cooperation should include joint policy action–focusing on macroeconomic, financial, infrastructure and industrial policies–to boost growth and structural change potential. Economic growth in emerging East Asia was stronger during the first half of the 2007, buoyed by strong consumption growth and external demand, and the rapid 11.5% growth in gross domestic product faced by the People's Republic of China (PRC). The combined gross domestic product (GDP) in the nine largest economies of the ASEAN (i.e. People's Republic of China, Hong Kong China, Indonesia, Republic of Korea, Malaysia, Philippines, Singapore, Taipei China, and Thailand) grew by more than 8.1% in the first quarter of 2007 (Q1), marginally lower than 8.2% in 2006. The growth in GDP was supported by strong consumption growth and external demand. In the first half of March 2007, GDP growth was 5.6% in four middle-income countries of the Association of Southeast Asian Nations (ASEAN-4), above 2006 levels. However, the four newly industrialized economies (NIEs)--Hong Kong, China; Republic of Korea (Korea); Singapore; and Taipei, China—moderated in Q1, with GDP growth slowing to 4.5%, from 5.4% in the year 2006. In the PRC, strong investment and solid consumption continued to support high growth rates. Domestic demand in the ASEAN-4 economies remained strong due to high level of private consumption, as public sector salary hikes and higher overseas remittances propped up household income. According to the Asia Economic Monitor, July, 2007, continued strong growth in the People's Republic of China and only slightly moderating expansions in the newly industrialized economies (NIEs), and most of ASEAN would lead emerging East Asia to robust 8.1% GDP growth in 2007 and 7.9% in 2008. However, surging capital inflows—which reached a record US$ 269 billion in 2006—brought with them increasing pressures for currency appreciation and fast-rising prices of assets. Inflation continued to fall in most ASEAN economies, but started to rise in the PRC, Korea and Singapore. Throughout the region, current account surpluses were sustained during the first half of 2007, while capital inflows remained strong. Financial markets gained across the region in the first half of the 2007 despite some volatility, with several policy makers increasingly anxious about the risk of a possible equity market bubble. Monetary policy responses varied across emerging East Asia—with the PRC; Korea; and Taipei, China tightening policy, Malaysia keeping policy rates unchanged, while policy rates in Indonesia, Philippines, and Thailand were lowered. Against a background of favourable economic conditions, financial sectors in the region have generally remained resilent, although signs of stress related to sharply higher asset prices and higher volatility in several markets are emerging. The potential risks to the economic outlook include greater than expected inflation; increased financial market volatility; a sharper US economic slowdown; a disorderly adjustment of global payments imbalances; and noneconomic events, such as geopolitical disruptions, or further outbreaks of diseases like avian flu.
According to the July, 2007 Update of the International Monetary Fund's (IMF) World Economic Outlook (WEO), the international economy has continued to expand at a brisk pace during the first half of 2007. As per the IMF estimates, emerging market countries have led the way, with the People Republic of China (PRC) growing by 11.5 percent in the first half of 2007, and India and Russia also growing very strongly. Although growth in the United States slowed in the first quarter, recent indicators show that the U.S. economy has gained strength during the second quarter. In the euro area and Japan, growth has remained above the trend with some positive signs that domestic demand is taking a more central role in the expansions. There are projections that international economic growth would be 5.2 percent in the year 2007. Among the advanced economies, growth in the United States is now expected at 2 percent in 2007 (0.2 percentage points lower than projected in the April 2007 World Economic Outlook). The risk of an oil price spike remains a concern. With sustained strong growth, supply constraints are tightening and inflation risks have edged up since the April 2007 WEO, while increasing the likelihood that central banks will need to tighten monetary policy further. Credit risks have risen, where the weakening of credit discipline identified in the IMF's April 2007 Global Financial Stability despite strong global growth, although some emerging market and developing countries have faced rising price pressures especially from energy and food prices. A slowdown in the US economy could represent a significant downside risk to the global economy. In the past, East Asia became vulnerable to slowing growth in the US economy given its relatively high export reliance on the US market. This fact is important to know since the United States (US) is facing slowdown in 2007. During the last slump in 2001–2002, the US imports fell by a cumulative 4.2% and this fall was translated into falling exports, cuts in industrial production, and declining growth rates in East Asia. Traditionally, East Asia has been viewed as a region that relies heavily on exports for growth. Thus, the East Asian economy has been considered vulnerable to external demand shocks. East Asia saw an average growth rate of
7.6% per year over the past 5 years, contributing nearly one-fourth of global growth in the same period. Yet despite its increasing share in world output, East Asia's economic size remains small relative to the US's 30.6% of world GDP, Japan's 14.0%, and European Union's (henceforth, G3 economies) 24.9%. East Asia's weight in global demand is also less than its weight in income, as it has continued to run large current account surpluses. According to the IMF's World Economic Outlook (WEO) released in October 2007, the forecast for global real GDP growth on a purchasing power parity basis has been retained at 5.2 percent for 2007 as in the July 2007 update, down from 5.4 percent in 2006, but forcast for 2008 has been revised down to 4.8 percent in October from 5.2 percent in the July 2007 update. In the US, real GDP growth had risen to 3.8 percent in the second quarter of 2007 as compared with 2.4 percent in 2006. The IMF's October 2007 WEO expects the US economy to grow at 1.9 percent in 2007 and 2008 as against 2.9 percent in 2006. According to the Global Financial Stability Report (April 2007), favourable global economic prospects, particularly strong momentum in the euro area and in emerging markets led by China and India, continued to serve as a strong foundation for global financial stability. However, underlying financial risks and conditions have shifted since the September 2006 Global Financial Stability Report (GFSR). The sub-prime segment of the US housing market is showing signs of credit quality deterioration, as per the Report. The economic impact of the housing market slowdown has been limited and some market indicators have begun to stabilize, suggesting that the financial effects may also be contained. There was a sudden fall in credit market confidence in late July 2007 brought on by the spread of risks from exposure to the US sub-prime mortgages with credit crunch spreading into corporate bond markets and equity markets. The US Federal Reserve has been the most aggressive in terms of easing monetary policy, with a higher than expected rate cut. The Report said that the shift to private sector debt flows especially bank-based flows into emerging Europe and portfolio flows into other regions, including sub-Saharan Africa, shows that foreign investors are taking more risk and an abrupt reversal cannot be ruled out. Institutions may well be acting in accordance with their own incentives but collectively their behaviour may cause a build up of investment positions in certain markets, possibly resulting in a disorderly correction when conditions change, the Report added. Flows and stocks of cross border claims have increased both in absolute size and relative to the volume of domestic economic activity, according to the Report. The diversity of assets, source countries and investors types now involved in cross-border asset accumulation suggested more stable flows. For some countries, the sharp rise in capital inflows has contributed to rapid credit growth and asset price inflation, at times complicating the conduct of policies. Report has resulted in rising difficulties in the U.S. subprime market and leveraged loan market. Financial market risks have also increased as credit quality has deteriorated in some sectors, and market volatility too has risen.

6. Conclusion
The Prime Minister's Economic Advisory Council, chaired by C. Rangarajan, during July, 2007 expected that the Indian economy will grow at 9% in 2007-08, with inflation contained at 4%, despite slowing credit expansion and pressures of a climbing rupee. The Indian economy is expected to be on an unprecedented strong trajectory of economic growth. With a 36.3% investment rate driving growth and net foreign capital flows expected to remain strong at US$ 58 billion, there is need for selective controls on the flow of debt funds into the country, namely external commercial borrowings (ECBs). Controls on FDI (foreign direct investment) or equity would be most unwise, according to C Rangarajan. The Economic Advisory Council estimates that net FDI will almost double from US$ 8.4 billion last fiscal to US$ 15 billion, and portfolio flows will grow by 76% from US$ 7.1 billion to US$ 12.5 billion. Although much has been promised as per the predictions made by the Government of India and others, yet the forthcoming Economic Survey 2007-08 may solve all our apprehensions regarding the real economic growth faced by India. The declaration of the National Policy for Farmers, 2007 and the successful implementation of the National Rural Employment Guaranty Act, 2005, may be fruitful for agricultural development, poverty eradication, rural development, and for inclusive growth.

No comments: