It is a year since the fall of Lehman Brothers and the global financial crisis that followed. Even as pundits in the West debate on whether the recession is over or whether the green-shoots of recovery are emerging, India already appears to be back on the path to growth. If the official figures are to be believed, India is expected to clock between 6 - 6.5% growth in 2010.
Whilst the Indian economy did not suffer as heavily as other countries in the wake of the global financial meltdown, largely due to the fact that India's financial system was not directly exposed to the toxic and distressed assets of the developed world, it was not completely immune to the repercussions felt around the world. There was undoubtedly a deceleration of growth in India.
Export led industries like textiles, IT services, gems and jewellery, in the main, took a beating. As capital flows began drying up, there was a fall in foreign portfolio investments and foreign direct investment in India. But all was not lost. Lower international commodity prices, led by plummeting crude prices reduced India's import bill during the last year. As the world economic leaders came to terms with the larger issues related to structural and systemic questions, India's woes were predominantly sentiment driven. Fears driven by a slumping world economy were fuelled by India's own 9/11 in the wake of the atrocious terrorist attacks in November 2008. The Indian economy has been looking for a silver lining in every passing dark cloud and the sketchy signs of recovery emerging from the developed world have brought the bounce back to the Indian economy. All this despite a poor monsoon that has traditionally been the yardstick to measure prosperity and growth in a given year!
India too seems well and truly to be stepping out of its gloom with stock markets showing a buoyant recovery, FDI flows increasingly moderately, Indian companies casting the dust off expansion plans, increasing activity in the domestic, financial and capital markets, and industrial production recording a steady increase.
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