India: A pause in the upswing

There has been a pause in India's long economic upswing, with GDP growth having fallen well below potential by late 2008. The government introduced some new stimulatory fiscal measures at the beginning of 2009, following a sizeable increase in public outlays in 2008.

In 2009, falling exports are projected to result in some slowdown in domestic demand. With the gradual recovery of the global economy and easier financial conditions, growth is projected to gradually regain momentum.

The extent of the deterioration in the fiscal position prior to the slowdown has reduced the scope for discretionary fiscal policy action. Indeed, the new government will face the need to restore fiscal discipline, speed up structural reform and increase sales of public-sector assets. Any further easing in policy should be achieved through lower interest rates, rather than discretionary fiscal expansion. The growing use of protectionist measures is a cause for concern.

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©OECD Observer No 274, July 2009

Economic data

GDP growth: -9.8% Q2/Q1 2020 2020
Consumer price inflation: 1.3% Sep 2020 annual
Trade (G20): -17.7% exp, -16.7% imp, Q2/Q1 2020
Unemployment: 7.3% Sep 2020
Last update: 10 Nov 2020

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