Strong Growth in Indian Economy

Economic and political uncertainties are casting a shadow over many economies across the world, but the outlook for India remains highly positive.

A recent study by Reuters reported that growth of industrial production in July was the highest in a decade, while the bi-annual World Economic Outlook published by the International Monetary Fund (IMF) continued to see India as one of the key drivers of robust growth in Asia.

The reports of a booming economy will be reassuring news to the jewelry manufacturers and retailers who have seen volatile gold prices causing a huge drop in the off take of gold, with the country’s first half total consumption being effectively half the level of a year ago, according to figures released by the Gold Fields Mineral Services (GFMS).

According to Reuters, India's industrial production in July grew at its fastest annual pace in a decade, clocking a higher-than-expected 12.4 percent growth when compared to a year earlier, driven mainly by increased consumer spending.

The annual rise exceeded the median forecast by a Reuters’ survey of 9.9 percent. Industrial output grew by 9 percent in June, and 11.1 percent in May.

Overall manufacturing rose by 13.3 percent; output of consumer durables like refrigerators and televisions rose 17.5 percent and production of capital goods rose 15.4 percent.

The recently released bi-annual World Economic Outlook report of the IMF also forecasts a positive outlook for India projecting an 8.3 percent growth in the Indian economy in 2006, and a 7.3 percent growth in 2007.

Though, the figures represent a moderate deceleration when compared to 2005 and early 2006, the IMF was upbeat about India.

However, both reports also sounded mildly cautionary warnings. While the IMF report noted that India was one of the countries that should work at improving their fiscal positions and pay attention to high public debt or budget deficits, Reuters quoted analysts as saying that the high growth rates could prompt the central bank to again raise interest rates over inflation concerns.