The FT reports that
India’s economy grew at the slowest rate for more than two years in the second quarter, confirming the country’s shift to lower growth rates of about 7 per cent.
The data means that the government’s predictions for growth in 2012 may be flawed.
The one piece of good news which may come from the data is that damaging inflation in the nation will drop.
India, the world’s second largest nation by population, has been in something of a race with China for GDP growth. China has the advantage of a central government which completely controls the bank system and can make investments in large companies. The Chinese yuan has also become a more powerful currency and may rival the dollar in a few years.
The FT also points out that
In response to the weakening outlook, the cabinet last week agreed a key reform to bring more foreign investment into the retail sector. It decreed that foreign companies would be able to have majority control of multi-brand retail operations and outright ownership of single brand stores.
But, protectionism is still a part of India’s industrial policy, so outside investment may be slow
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