Following the credit crisis, India, like many other developed and emerging economies, resorted to fiscal and monetary stimulus to push growth back to its pre-crisis trend immediately.<\/p>\n
This easy approach of loose fiscal and monetary policy did boost growth strongly – but the low productivity dynamic accompanying it meant that the country faced challenges of inflation, the current account deficit and tight inter-bank liquidity.<\/p>\n
Investment spending: We do not have good real-time indicators for investment trends, but it appears that investment spending is also beginning to slow, based on the quarterly results of a select few engineering and construction companies for the quarter ending June 2011, and the steel production trend.<\/p>\n
Government spending: While state government spending data are not available, the monthly central government spending data indicate that government spending has declined on a year-on-year basis in May and June 2011.<\/p>\n
Auctioning of coal blocks: The government has been working on an amendment to the Mines and Minerals (Development and Regulation) Act to allow allocation of coal mining rights on a competitive-bidding basis.<\/p>\n
Land acquisition bill: Land acquisition has emerged as a prominent political issue, with farmers complaining about poor compensation and the loss of livelihood subsequent to the land acquisition.<\/p>\n
We expect the sum of food, fertilizer and fuel subsidies to be 2.1% of GDP in F2012, up from 1.8% in F2008 (including off-budget expenditure).<\/p>\n