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Showing posts from June, 2010

Will the mirror crack from side to side

The volatility in India’s financial markets is a consequence of fears within the euro-zone. The Bombay Stock Exchange’s sensitive share index has yo-yoed over the past few weeks with brief spells of euphoria marred by successive stretches of gloom. It is hard for market analysts to determine, even within liberal bands, the possible direction that markets will take in the weeks and months ahead. Be that as it may, recent figures released by the government suggest that the economy has performed better than expected, with growth a few notches higher than previously forecast. The rise in GDP for the past fiscal year is now stated to be 7.4%, supported by strong results in industrial manufacturing (9.3%) and even a marginal rise in the agricultural sector (0.2%).

But this good news comes with a caveat. The economy lacks fundamental support within two important domains. First, private consumption is uninspiring with a moderate increase of 4.3% against an average of 8.5% witnessed in the pre…