By Li Bo
India's Congress Party and its United Progressive Alliance that have won a landslide victory in the general elections are facing an uphill battle to spur the slowing economy after the next government is formed, analysts said.
"The Congress-led coalition's win clearly spells out people's mandate for a government which will be able to steer the country when the whole world is going through an economic turbulence," said Sanjeev Kumar Sharma, a Delhi-based political analyst.
Prime Minister Manmohan Singh, who has served the full term of his last five-year tenure, successfully steered the Indian economy through a period of 9 percent growth annually before the global crisis hit.
But how to keep the booming momentum when its foreign markets are shrinking and some 200 million Indians are still struggling in absolute poverty remains a serious question.
The International Monetary Fund (IMF) has urged export-reliant economies to rebalance its growth model and focus more on spurring domestic demand.
Figures showed that India's exports slid by 33.3 percent in March, their sixth straight monthly fall as the global financial slump gouged demand in the country's main US and European markets.
The Indian government has forecast more bad news in the months ahead for export demand for made-in-India goods -- like textiles, jewellery and handicrafts.
Exports account for around 15 percent of India's gross domestic product.
Dragged down by the export-tied sectors, India's industrial output shrank. Factory and mine output contracted by 1.2 percent in February after expanding by 9.5 percent in the same month a year earlier.
India's central bank has lowered its economic growth forecast to 6 percent in the year to March 2010, compared with the estimated 7.1 percent last year.
But there were also signs of tentative recovery in business confidence, domestic demand and public spending.
An Asian Development Bank report noted that net equity outflows had slowed significantly in the first quarter of 2009 in Asia compared to the second half of 2008, signaling that foreign investors are now far less pessimistic than they were about the region's prospects.
Internal demand continues to be robust particularly in the rural sectors for cement, steel and passenger cars.
Indian car sales grew for a third straight month in April. Sales rose 4.2 percent to 102,899 units last month.
Official data showed that India's annual inflation rate has eased, falling to 0.48 percent for the week ending May 2.
Analysts believed the central bank could lower rates by another 50 basis points in the coming months to spur the economy.
Being considered the foremost of the emerging economies, India is taking a going-abroad strategy, encouraging competitive companies to expand their business.
India's largest truck and bus manufacturer, Tata Motors Company, will set up a truck manufacturing factory in Myanmar to produce heavy turbo truck assembly and component parts.
The move is part of India's "look east" policy which envisages the Indian government's engagement and cooperation in bilateral development projects covering road building, power generation, oil refining, power line transmission, telecommunications and information technology services in east and southeast Asian countries like Myanmar.
India's metal czar Anil Agarwal-promoted Vedanta Resources is expanding its ventures in Zambia while owning four mines in the country already.
In addition, the Congress Party has outlined the need for stimulus through higher government spending in the electoral campaign.
India estimates it needs 500 billion US dollars by 2012 to upgrade its overwhelmed airports, potholed roads and inadequate utilities.
(Xinhua News Agency May 19, 2009)
