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Monday, June 04, 2012

Indian Economy: Difference between 2001 and 2012

The difference between Indian Economy of 2001 and 2012 relates to how demand and policy are inter-related.

In 2001, policy certainty (directional certainty) helped drive investments when demand was yet not established. In 2012, demand is well established but it is the lack of policy certainty (again directional) that is preventing investments.

Thus, if India can sort out its politics it can gain quite a bit in a short time. Meaningless ambivalence about policy has condemned India to low growth seen recently. Hopefully the 5.3% quarterly GDP growth may wake the government from its slumber.