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The Economist Intelligence Unit Ltd (2005)Management > Asian Management > Lectures > Independent Research > The Economist Intelligence Unit Ltd
The Economist Intelligence Unit Ltd (2005)Due to their crucial seat numbers, The Left Front has made the government agree to not privatise large SOEs and has managed to extend this to minority stakes. There will also likely be a delay in India’s labour reform laws and the Left Front has also halted some FDI. The Left parties have also made it harder for firms to lay off workers Annual GDP growth in the US will slow from 3.9% in 2005 to 2.9% 2006/7, affecting India’s IT software exports, as the US is a vital market. Relatively low integration with the world economy means that the country is shielded from any shocks and economic growth in India will be robust until 2006/7 Growth is set to be sustained at about 7-7.5%. It will only be affected by a sudden drop in the US economy, rising oil prices (such as the current US$75/b and a poor monsoon. Services exports will continue to grow strongly, as IT and business process outsourcing will lure Western companies to India. Poor infrastructure inhibits the labour intensive, export manufacturing industries. Mr Singh, the Prime Minister, argues that India’s infrastructure requires US$15b every year for the next decade for it to dramatically improve. This is unlikely to happen soon, due to the poor fiscal performance and the government’s unwillingness to accept help from foreign firms in that sector
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