Why India Economy, ETF Could Bounce Back Stronger

India’s economic expansion has slowed but has not completely hampered its economy and exchange traded funds (ETFs).

India’s top officials seem adamant that the country will not only weather this storm but will recover more quickly than other emerging economies:

• Manmohan Singh, India’s Prime Minister, has reassured the citizenry that the fundamentals of India’s economy remains strong and that the economy will grow about 7% in the 12 months ending March 31, writes Kartik Goyal for Bloomberg. Even though growth has slowed, many countries would love to have positive growth, period.
• The Prime Minister also notes that much of India’s growth is internally driven and he expects India will continue its stable, solid growth. Only 17% to 20% of India’s economy is export driven. Internal consumption, the domestic service sector and agriculture could provide the kick-start, says Pradeep Unni for Business 24-7.

But that doesn’t mean India can get complacent.

• Oscar Frenandes, union labor minister, claims that the global recession is the type of calamity needed to instigate an Indian economic revival, according to The TImes of India.
• Interest rate cuts could lead to increased demand for loans and credit, which could bring inflation back to the economy and result in defaults. Right now, inflation is around 5.9%, down from 12.9% just last August.
• India is working to make smart policies, mindful of the issues, which could serve it will in a recovery.

India’s government has started measures to stir up economic growth which has helped boost the rural economy. The majority of labor is in the agriculture sector which remains unaffected by the economic woes. The industral sector in India is said to be stable and the overall economy in India is “in control.”

• PowerShares India Portfolio (PIN): dropped 51.2% in 2008

• WisdomTree India Earnings (EPI): dropped 56.2% in 2008

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