Column: Political turmoil vs economic turmoil
Let me start with India’s economic forecast, especially output growth, which is likely to be less than 6% in the coming year. Domestically, we used to crow only two years back that we had successfully avoided the financial crash of 2008-2009 and that our GDP growth rate was north of 8%, which compared extremely well with that of the global average of less than 2%. Since then, our economic health has deteriorated with a spate of high-profile scams denting economic sanguinity. As far as global output growth is concerned, in 2012 it averaged only slightly more than 2% and is likely to stay sluggish in 2013. This is because economic troubles are evident in the mature economies of Europe, which are back in recession, and the United States, which is experiencing an anaemic economic recovery. The risk in 2013 is that these economic troubles could be mutually reinforcing, thereby making even a 6% GDP growth for India look optimistic in retrospect.
One issue that could strain the struggling global economy is the approaching fiscal cliff in the US. The White House and the US House of Representatives