Government Efforts Driving India's Recovery

by: Wisdomsmith

This is s a good chart (click to enlarge) which tends to explain how the Indian economy has recovered despite soaring inflation and recession, which is impacting private consumption.

Looking at inflation, i have found it hard to believe that Indian economy can grow at >7% this year. But maybe it is the government spends which is making the difference. Even in FY10, fiscal spends are growing at above 20%, as per this ICRA chart, which seems to have put overall consumption above 8%, which it seems is a pretty robust level considering even at the height of expansion, consumption has expanded at > 8% only for 2-3 quarters.

The government says private consumption is growing at 6% on constant prices. Inflation is lets say around 8-10%. This means private spends are growing at around 15% on nominal basis. Possible? Still looks a little high

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