KPMG: India Economic Growth Slowing to 5.5

By Michael Foster, Big4.com Blogger

KPMG Indian Chief Operating Officer Akhil Bansal said that India’s growth has slowed to around 5.5 per cent, as national and international challenges put a damper on the south Asian nation’s meteoric growth of recent years.

Bansal also said that India needs to focus on “maintaining survival” in both the public and private sectors, but he added that the public sector carries a bit more responsibility in pushing India’s economy ahead, since the public sector consists of “large organizations.”

India’s growth fell to 5.5 per cent in the second quarter of 2012, as manufacturing, mining, and quarrying output fell amidst depressed demand, especially abroad.

While Bansal emphasized that the nation’s growth exceeded growth in other nations, the sustainability of India’s fast-paced growth has been under question amidst the slowdown, raising uncomfortable questions of the nation’s ability to grow its middle class.

One of the biggest challenges for India remains the endemic corruption that plagues the nation at every level. Prime Minister Manmohan Singh’s government is repeatedly criticized in India and abroad as a “deeply corrupt” organization, as the Washington Post recently put it. The Post added that Singh’s economic reforms have failed to materialize because of continual waste and corruption in industries that have slowed down the most, particularly coal mining.

To combat slowing growth, Bansal recommended deeper collaboration between public sector organizations and private firms, although he did not clarify what that collaboration would entail.