Mid-Year Review of the Indian Economy - 2001-2002

The expected decline in the FII inflow on account of terrorist attacks in the United States and the turmoil in the domestic capital market might reduce the growth rate of money supply in the rest of the current fiscal year. [...] But on the other hand, the expected increase in the government deficit this fiscal year, due to decline in the tax revenues, and the decline in the interest rates, may stimulate the growth rate of money supply in the rest of the year. [...] The financing of gross fiscal deficit of the Centre and States, given in Figures 11,12 and 13, indicates that the share of market borrowings have gone up in the case of the Centre and gone down in the case of the States. [...] Given the declining trend in the growth of exports and capital flows, the exchange rate depreciation and the downgrading of India's sovereign ratings for future borrowings from abroad, the servicing of the IMD and the Resurgent India Bond (RIB) could be a big burden for the economy in the coming years. [...] Mfg 48 Causes of Industrial Recession The Rise and Fall of Industrial Growth in the 1990s The rise and fall of the industrial growth in the 90s brings into focus the problems of adjustment of the Indian industry to the on-going economic reforms that were initiated in 1991.