Is India's Growth Story in Awry?

It seems like the investors both of Indian and foreign origin, are losing interest and are no longer willing to put in any money. At this Manmohan Singh, Prime Minister states that investment is an act of faith. The investors are scared about the slow pace of decision making by our policy makers and also the drift in the policy. Kaushik Basu, Chief Economic Advisor, made a comment on these crucial matters at the Carnegie Endownment for International Peace.

His statements were directing towards the Article IV consultation of the International Monetary Fund with the Indian government. IMF is recorded to have two pronged discussions with its member countries every year. The report for this year highlights the reason for weak investments are the government concerns and policy uncertainties. It was also mentioned that the investors are disappointed with government coalition, government officials indulging in scandals and the civilians revolting against the policies etc.

The government has to face a challenge of reviving these investments for the rapid economic growth of up to 9 percent every year. Since 2008-09, the year of global crisis, there has been a sharp decline in the GDP from 14 percent to 10 percent effecting the growth of our economy. In a recent IMF working paper titled “Does the Business environment Affect Corporate Investment in India?” written by Kiichi Tokuoka the above analysis in given.