India’s economic growth slid to 5.3 percent in the September quarter, stuck at its lowest level in three years as New Delhi struggles to enact reforms to kick-start Asia’s third-largest economy.
The figures released yesterday by the government were in line with expectations that the second quarter of the fiscal year was lackluster.
A weakening economy complicates New Delhi’s effort to create jobs for its exploding youth population and balance the budget, while paying for costly social programs in advance of national elections scheduled for 2014.
India is struggling with high inflation and high interest rates, coupled with a wide fiscal deficit, weak currency and an uncertain policy environment, which have hit both consumption and investment.
“The country is marred by the investment slowdown,” said Madhavi Arora, an economist at Kotak Mahindra Bank Ltd. “The investment story has not improved in the last two and a half years. It is worsening each and every quarter.” She said she expects growth for the fiscal year ending March to be 5.6 percent. That would be the country’s worst annual performance since 2003, according to data provider FactSet.
New Delhi has been at pains to attract foreign capital and avoid a ratings downgrade, announcing ambitious reforms that are now foundering in parliament.
The ruling Congress party’s headline efforts to ease restrictions on foreign investment and allow companies like Wal-Mart Stores, Inc to open supermarkets in India sparked fierce resistance from opposition politicians, who shut down parliament over the issue, casting further doubt on the government’s ability to execute policy reforms.
While New Delhi’s reform initiatives have boosted the stock market, economists are divided over how much the policy overhaul will help the real economy in the near future.
Even if New Delhi manages to push through liberalization measures it is not clear whether foreign investors will take advantage of greater access to industries such as aviation, retail and insurance given India’s other looming uncertainties.
“All these so-called reforms are more of a euphoria-driven thing rather than [having] an actual impact on the economy,” Arora said.
India’s economy grew 5.5 percent during the June quarter, after expanding by 5.3 percent in the March quarter.
This is the slowest pace since the global recession, which dragged India’s economic growth down to 3.5 percent for the January to March quarter of 2009.
‘ACCORDING TO PLAN’: A company official said that it has set up production sites worldwide to provide services and that its Wisconsin project was going smoothly Hon Hai Precision Industry Co’s (鴻海精密) smart manufacturing center in Wisconsin would begin trial manufacturing in the middle of this year, the company said yesterday, adding that it plans to build a research institute to develop key technologies to support growth over the next five years. Hon Hai, known internationally as Foxconn Technology Group (富士康科技集團), said in an annual report submitted to the Taiwan Stock Exchange that its planned Foxconn Institute for Research in Science and Technology would conduct research into artificial intelligence, next-generation communications, quantum computing, cybersecurity and nano semiconductors in Taiwan. Hon Hai is to make products at the center
TV and online retailer Momo.com Inc (富邦媒體) yesterday said it has set up a new logistics subsidiary, Fu Sheng Logistics Co (富昇物流), to oversee the company’s extensive shipping operations. Leveraging Momo’s 23 satellite warehouses and distribution centers nationwide, Fu Sheng will be in charge of executing the retailer’s same-day shipment plan for deliveries in Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung, Momo said in a press release. Seeking to further shorten its supply chain, the company is to set up another seven satellite warehouses and distribution centers by the end of the year. “Fu Sheng has a fleet of 200 couriers
US-CHINA TENSIONS: The company said that it supplies self-designed chips to the Chinese company and, as such, is not affected by the latest US export restrictions Macronix International Co (旺宏電子) said it does not expect its shipments of memory chips to Huawei Technologies Co (華為) to be affected by the latest US export restrictions on the Chinese tech giant. “As long as the company [Huawei] places orders, we will ship [chips], unless the [Taiwanese] government restricts all Taiwanese companies from shipping” to Huawei, Macronix chairman and chief executive officer Miin Wu (吳敏求) said on Monday in Hsinchu. The US Department of Commerce on Friday took a further step to block chip supplies from non-US companies to Huawei by requiring foreign semiconductor makers to get US government permission before
E Ink Holdings Inc (元太科技), the world’s sole supplier of e-paper displays for e-readers and shelf labels, posted its best quarterly net profit for the first quarter in nine years amid increased demand during a traditionally slow season. Net profit soared 80 percent to NT$787 million (US$26.23 million) in the quarter ended March 31, compared with NT$438 million a year earlier. That translated into earnings per share of NT$0.69, up from NT$0.39. E Ink posted lower royalty income of NT$371.23 million last quarter from NT$448.74 million a year earlier, a company financial statement showed. E Ink said that it expects royalty income to