India shaping up to be rare bright spot in sluggish global economy

AS the global economy splutters, the focus is on India which is now the fastest-growing major economy. A recent report said that the country could be the only one in the world to record 7 per cent plus growth in 2016. China is expected to grow at 6.5 per cent, its lowest growth rate in a quarter of a century.

When Prime Minister Narendra Modi came to power, there was an expectation that the Indian economy would turn around and get back to high growth. Initial results from Mr Modi's efforts to liberalise Asia's third-largest economy have been mixed. Growth did not decline but it wasn't the big spurt that many were hoping for.

Two years on, things appear to be changing with economic indicators this year, so far, showing that India may be back on the path of rapid economic growth. The Finance Minister, Arun Jaitley, has recently said that the government may revise its economic growth target for the current fiscal year to 8-8.5 per cent from its earlier projection of 7.5 per cent. One reason for his optimism is that after a gap of two years, the country is expecting above-normal rainfall during its Monsoon season. Good rainfall means rural demand will go up substantially. Another bonus would be a cap on India's persistent food inflation.