While many hoped India had become one of those rare economies -- like China today and Japan in the 1960s -- that could grow around 10% annually for a decade regardless of what happened in the rest of the world, doubts are appearing.
As the global slump and accelerating inflation take their toll, it is becoming clear that India's rapid expansion was due in part to benign conditions that boosted emerging markets everywhere and that India remains vulnerable to economic cycles. Some forecasters now say gross domestic product might grow just 7% or so this year and maybe even next -- down from 9.6% in the fiscal year ended March 31, 2007, and an average of almost 9% for the past five years.
The difference between expanding by 7% or by 9% will make an important difference to India, as Jackie Range and Paul Beckett report. Expectations for growth have been so high that anything less than racing performance could stall the forward momentum of the recent expansion. A slowdown also would render India, a hot destination for U.S. goods, less able to take up the slack in the global economy caused by the problems in the U.S. and Europe. A slowdown also would put India further behind in its bid to rival China as a regional and global power.
Read Jackie Range and Paul Beckett's report from New Delhi:
http://online.wsj.com/article/SB120872706240429483.html?mod=djemasialinks
