The new Indian government will have to take tough and unpopular measures to turn around the country’s ailing economy, according to the new Prime Minister Narendra Modi.
India’s economic growth is hovering close to a decade low, with gross domestic product for the year ended March 31 clocking a 4.7 percent growth, which is marginally higher than a decade-low growth of 4.5 percent a year ago. The average retail inflation stood at around 10 percent over the last two years, lowering the purchasing power of over 800 million Indians who survive on less than $2 per day, reported Bloomberg News.
“To take the country out of its economic ill-health, taking hard decisions and administering a bitter pill when required, will be necessary,” said Modi on Saturday. “It’s necessary to take steps to improve financial discipline and improve the economic health of the country. I am well aware that my steps may dent the immense love that the country has given to me. But when my countrymen would realise that these steps would result in getting the financial health back, then I will regain that love.”
Last November, rating agency Standard & Poor’s warned that India’s debt outlook of BBB- might be reduced if the country failed to elect a government that would turn around the economy. Now, it says that Modi’s economic policies aimed at reducing budget gap and boost growth will influence credit ratings.
India’s Central Statistics Office reported on Thursday that the consumer price index rose 8.28 percent in May from a year ago, its lowest level in three months. The new administration, which is expected to announce its first budget in early July, estimates the country’s budget deficit to decline slightly to 4.1 percent of the GDP in the year through March 2015, down from 4.6 percent a year earlier. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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