India Hopes for Financial Revival

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13 February, 2014

This is the Economics Report from VOA Learning English.

India is hoping its economy will improve. In the last two years, economic growth dropped to its lowest levels in ten years. But there are few signs that the economy could return to the high growth rates that once made India one of the world's fastest growing economies.

Gurdet Singh grows crops on about 40 hectares of fertile land in northern Punjab state, the area is financially successful because of farming. Mr Singh says, he plans to buy a new and bigger tractor to make his work easier. Mr Singh is so successful that he hopes to buy a car after he pays the loans for his new tractor.

India's automobile manufacturers have suffered severe financial problems during the past two years. Industry officials are hoping that people like Mr Singh and others in rural areas will begin buying cars again.

Vishnu Mathur is the head of the Society of Automobile manufacturers of India. He says there is weak demand in urban areas for passenger cars, but he says economic gains in India's rural areas could help car makers.

Good feelings about the car industry may be a sign that the worst could be over for the Indian economy. Experts believe the economy will grow less than five percent when the 2013 fiscal year ends in March, but they say the country's agricultural industry will show better growth.

The Indian currency - the rupee lost more than 20 percent of its value compared to the dollar last year, that should help India's exports which are increasing.

Rafique Ahmed is the head of the Federation of Indian Export Organizations. He says exports are growing because of the devalued rupee and better global economic conditions.

While growth is widely expected to increase, economists say it is unlikely to reach levels seen in 2011 for example, when growth was nine percent.
Economists say confidence among investors, both in India and in other countries must return before the Indian economy can improve.

Private investment has slowed because investors are concerned by the lack of reform and government barriers to business. Many investors and businesses are waiting to see whom voters will choose to lead the country in national elections to be held by May. Finance Minister P. Chidambaram has said growth will increase to more than six percent in 2014.

And that's the Economics Report. For more stories about economics, go to our website, I'm Mario Ritter.