India weathers the downturn but challenges remains

By EgovAsia Editors | Oct 26, 2009

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Experts from the Economist Group assessed the actions and policies of the new government during the First India Forecasting Forum,  "Taking Charge in Turbulent Times".  Various business leaders gathered to discuss the impact of the global downturn and the policies and reforms required to put their respective industries on track for rapid and sustainable growth.

The global downturn has created unprecedented upheaval in most sectors of the Indian economy. Manufacturing production has dropped off amid a slowdown in the construction and property sectors, while IT firms and other exporters are struggling to cope up with shrinking external demand. Businesses in India also continue to face the familiar challenges of uncertain regulatory environment, excessive bureaucracy and persistent infrastructure bottlenecks.

Many organizations have been able to successfully navigate the downturn by focusing on their core business while outsourcing non-core functions. While sectors such as telecom, finance and insurance have been early adopters of this approach, there is a plethora of opportunities available over the next few years for the outsourcing industry in India.

The report released by the Economist Intelligence Unit stated, “There is unlikely to be a sudden rush to implement comprehensive liberalizing policies. This is not only because the government's foremost concern is maintaining domestic economic stability in a time of general economic uncertainty, but also because there remains resistance to reform within Congress and among its core supporters, particularly in rural areas. Indeed, support for maintaining the status quo has risen in some quarters because India has weathered the global recession far better than most countries, bolstering the argument that India's slow and, at times, unsteady process of liberalization is in fact a blessing rather than a curse.”

The reconfirmation of the Indian National Congress as the main governing party means that economic policy will remain broadly consistent with the direction that has been pursued over the past five years. The administration's top priorities will continue to be mitigating the effects of global economic recession on India and delivering populist measures designed to help the common man.