Vital signs of economic revival have seen throughout the globe. The U.S. GDP data showed a contraction of GDP by 5.7% for the first quarter of 2008 and the corporate profit after taxes has reported a profit of 1.1%. The turnaround has taken place after one year when it reported 10.7% drop.
Japanese factory output rose 5.2% in April, the biggest jump in more than half a century. The South Korean industrial output has increased. It was constantly increasing for the fourth straight month.
The picture of India was rosy. The march quarter GDP showed a clear leap of our economy. GDP recorded march quarter was 5.8, which is above expectation of analysts of 5.3%. The sharp turnaround was mainly because of high election campaign expenditure by the political parties. If the monsoon rain is above the average, then the economy will record a growth over 6.2%in the coming quarter. Dr. Manmohan Singh and his team will press for liberalization of banking and insurance sector, priority to rural health and education, etc. They may resume PSU disinvestment, (at present the fiscal deficit are around 6.5% of our GDP)the deficit widened due to Government’s additional spending on farm subsidy, farm debt scheme and other stimulus packages announced during the period. In Dollar terms India’s budget deficit would be around $70 billion. The faster reforms and disinvestment will give boost to economy which is not fully depend on exports. Indian exports account for 15% of the GDP which a small figure comparing with china and Japan. India uses its resources domestically than exports. Reforms and incentives to farm sector can be a high priority area because India’s 80% of population are directly or indirectly connected with agriculture.
The ongoing reforms and stimulus packages will help the world economies to come out from contractions. Signs of revivals are seen in Baltic Dry Index, in petroleum prices and even in natural rubber prices. If the economic stimulus packages including interest rate will help the Indian economy to grow at a faster pace and which will lift the other countries’ economy as well.
