Business Briefing 16/01

Another Sort of Bounce Back; and Late Praise for Lalu

Over the past few months there’s been a stream of pleasant surprises for the Government on the economic front. Numbers from all directions, most recently the 11.7 per cent growth in industrial production, are clear pointers to a more than robust economic recovery. Almost all automobile makers have reported record sales in the last quarter, and even India’s exports are showing signs of recovering from a global slump in demand—showing that both investment and consumption are on the up. “What should be most heartening for the Government is that the stimulus measures seem to have paid off significantly.

Interestingly, India’s stimulus packages were substantially smaller than that of many major economies. That should put an end to the debate about whether the Government should continue with them or not,” says Prithvi Haldea, chairman, Prime Database. The 11.7 growth in industrial output for November 2009 represents the highest increase in two years, although undoubtedly exaggerated by the lower base in the same period last year. As part of the Rs 1.86-lakh-crore stimulus measures, the Centre had cut excise duty by 6 percentage points and service tax by 2 percentage points, besides expanding the Budget’s plan expenditure, and offering several sops to exporters. Now, if only someone can offer a quick fix for skyrocketing food prices.

Changing Tracks by V Nilakant and S Ramnarayan (Collins Business, Rs 399) is yet another tribute to the former railway minister, Lalu Prasad, and his efforts to put back on track a nearly bankrupt Indian Railways. Through interviews with senior bureaucrats involved in the exercise, and some number crunching, the authors try to recreate the whys and hows of the terrific turnaround.

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arindam